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Last Updated: Friday, 11 November 2005, 15:25 GMT
India sees inflation accelerate
Shoppers in India
Rising prices could lead to higher interest rates
Annual inflation in India rose to a quicker-than-expected 4.75% at the end of October, figures have shown.

India's finance minister Palaniappan Chidambaram added on Friday that it was "inevitable" that inflation would rise to about 5%.

Separate economic figures also showed continued strength in India's industrial sector, with output growing 7.3% in September from a year ago.

Analysts said the growth could lead to pressure for a rise in interest rates.

The Reserve Bank of India raised short-term interest rates by a quarter of a percentage point to 5.25% last month.

Resurgence

Within the industrial output figures, manufacturing output - which accounts for more than three-quarters of industrial output - grew by 8.9% in September, up from August's figure of 8.2%.

"Industry is clearly showing sustained resurgence," SP Prabhu of IDBI Capital Market Services in Mumbai told the Reuters news agency.

"Certainly, as industry and GDP expand, concerns of demand-side inflation getting in will rise."

Analysts said rates may be raised at the Reserve Bank of India's next meeting in January.

Rising fuel prices have also been behind rising inflation in India. Domestic prices of petrol and diesel were raised by 14% in India earlier this year.




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