New Indian Prime Minister Narendra Modi’s promises to revive the economy face a gathering threat from inflation, which is creeping up again due to oil prices, weak monsoon rains and hoarding. Food inflation, one of the reasons voters resoundingly ejected the previous Congress government in elections in April and May, is gathering pace with troublesome onion prices in the spotlight.
The new government announced measures last week to tackle the problem after winning the general election on a platform of good governance and jump-starting the economy, which is growing at its slowest pace in a decade.
The Wholesale Price Index, the most closely watched cost-of-living indicator, rose to 6.01 per cent in May driven by food and fuel prices — the highest figure since December and compared with 5.20 per cent in April. Other inflationary factors are beyond Modi’s control.
Global oil prices have been rising as worsening strife in Iraq triggers fears of supply disruptions — a key concern in India, which imports more than 80 per cent of its crude oil needs.
