Business

India's inflation rate falls but remains above 9%

Man with bags of tomatoes
Image caption A drop in the rate of food price inflation helped to bring the overall figure down

India's inflation rate fell back in November, but the rate has remained high even though the economy faces slower growth.

The wholesale price index rose at an annual rate of 9.1% in November, down from 9.7% in October.

The fall was helped by a drop in the rate of food inflation, which fell to 8.5% from 11%.

Rising prices have been partly driven by falls in the rupee which makes imports more expensive.

The rupee hit another record low against the dollar on Wednesday, and is down by more than 18% since July.

The rate of fuel inflation rose to 15.5% in November from 14.8% the month before. Manufacturing inflation also crept up to 7.7% from 7.6% in October, affected by rising wages and increasing raw material costs.

Inflation as measured by the wholesale price index has been over 9% for 20 of the last 22 months.

Asia's third-largest economy is fighting inflation against the backdrop of a weakening economy. Industrial output contracted by 5.1% in October from a year earlier, the first such fall in over two years.

Indian Finance Minister Pranab Mukherjee said that policymakers must now concentrate on improving economic growth rather than taming inflation.

"[The] sustained high level of inflation, which has been a major policy concern for us in the last two years, is now beginning to moderate", he said.

India's central bank has increased interest rates 13 times since March 2010 in an effort to hold down rising prices.

However, the bank has suggested that it may not increase the cost of borrowing further because of weakening growth.

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