30 Aug 2008

Economic growth slowing in India

6:41 am on 30 August 2008

India's economy grew at a slower-than-expected annual rate of 7.9% in the three months to June - its slowest rate of growth in more than three years.

This compared with 8.8% in the previous quarter and 9.2% seen in the same quarter a year earlier.

High interest rates, rising oil and food prices are likely to contain growth at about 7.5%, analysts said, down from 9% or more in previous years. India has struggled to contain inflation, which is at a 13-year high.

The Reserve Bank of India has been raising rates to cope with rising inflation, and they now stand at 9%, an increase of 1.25% since April.

Analysts doubt the central bank will ease interest rates.

Separately, India's annual inflation dipped to 12.4% for the week ending 16 August - down from 12.63% a year earlier - as fuel and power costs eased. This time last year, inflation stood at 4%.