Inflation hits highest point for half a year in India and China

INFLATION in the world’s two most populous countries reached seven-month highs in September, according to official statistics released by the Indian and Chinese governments yesterday.

The effect of poor weather on food prices has been blamed for the rise in Chinese consumer inflation, which stood at 3.1 per cent in the year to last month.

However, the rate is still below the 3.5 per cent target for the year set by the government.

In the same period, the rate of wholesale price inflation in India has risen to 6.46 per cent, up from a 2013 low of 4.7 per cent in May.

The increase will likely put further pressure on the Reserve Bank of India’s (RBI) new governor, Raghuram Rajan, who has already hiked the country’s benchmark interest rate from 7.25 per cent to 7.5 per cent.

Rajan has previously spoken in favour of an inflation target for India, suggesting that the central banker may continue to tighten monetary policy in the months ahead. The RBI’s next rate decision comes later this month.