India’s inflation rate highest in three years

India - Rising food and energy costs has led to the highest inflation India has experienced in three years, reports said.

Local officials have been raising bank cash requirements and limiting rice exports to curb the inflation after India's weekly wholesale price index hit 7.57% for they year up to 19 April, the highest since November 2004.

The wholesale price index is more closely monitored than the consumer price index because it tracks a wider range of goods, instead of just reflecting shop and market prices.

Meanwhile, the increased prices of food staples such as rice, wheat and oil have fanned inflation worldwide. This has led the government to impose price controls and control exports of essential goods, reports said.

Fighting inflation is essential for India where a much higher proportion of people's salary is spent on food than in more developed countries.

Gaurav Kapur, senior economist at ABN Amro bank in Mumbai said: "Inflation could ease over the next few weeks, as the impact of these measures takes hold. That said, risks still pretty much remain on the upside for inflation, especially considering that no relief seems to be in sight from the spiralling international commodity prices."

In the coming months however, India's finance minister Palaniappan Chidambaram said that food prices would fall.