Rapid inflation threatens India's boom times

Inflation in India has soared to its fastest pace in more than three years,raising the prospect of a tighter monetary policy that would jeopardise thecountry's fading economic renaissance.

The figures, which are deeply embarrassing to the Indian government and werepounced on by opposition politicians today, come as soaring prices offoodstuffs and industrial raw materials remain at historical highs, fanninginflation across Asia.

Indian wholesale prices rose at a 7.4 per cent annual pace in the week toMarch 29, up from 7 per cent in the previous week and wrong-footingeconomists' predictions for a flat reading. As recently as the first week ofFebruary the gauge stood at just 4 per cent, well below the central bank's 5per cent comfort threshold.

In China, Indonesia and Pakistan inflation rates are above 8 per cent.Consumer prices in Colombo, the capital of Sri Lanka, have risen about 24per cent in the past year, according to Bloomberg, the financial dataprovider.

Oil touched a record $112.21 (£56.9) a barrel this week in New York. Wheatprices have more than doubled in Chicago over the past year, and touched arecord high of $13.495 a bushel in late February.

Rice, a staple food across South Asia, has increased in price by more than 40per cent in some markets since January – one of the factors that promptedthe World Bank to warn this week that more than 30 countries face theprospect of food riots.