Inflation in India Hits a 13 Year High of 11.42%

The economy is posing quite a challenge to the Indian government at the moment. India has been unable to escape the serge in global commodity prices, especially the record prices of crude oil, and inflation has hit a 13 year high of 11.42%. It’s of particular concern because India’s fast growing economy requires the country to import around 75% of its crude oil supply.

However, that’s not the only problem for the government. The share market has continued to fall and reached a 10 month low recently. So far, there haven’t been any takers for the cheap shares either. The Reserve Bank of India has lifted interest rates, for the second time in two weeks, to 8.5% but economic growth isn’t expected to be affected too much. It should continue at around 7.5% in 2009.

The high inflation isn’t only an issue for India's residents. It’s also increased the cost of travel for tourists, with higher hotel prices, airfares, and prices of meals in restaurants. Inexpensive places to stay have become a rarity in Mumbai, although fortunately it is still possible to find some decent but cheap accommodations and budget hotels in Mumbai.