India battles both inflation and threat of drought
India’s inflation eased in June after the new government curbed farm exports, but a growing risk that drought will damage summer crops could encourage the central bank to keep interest rates on hold at a policy review meeting early next month.
Consumer prices rose 7.3pc from a year earlier – helped by a slowdown in food inflation. In May, retail prices rose 8.3pc from a year earlier.
New Prime Minister Narendra Modi has made controlling inflation the topmost priority of his administration. But prospects of a first drought in five years this summer could revive price pressures.
Mr Modi’s administration increased subsidised grain supplies and set stockpile limits this month to prevent hoarding of onions and potatoes and so curb price gains.