India to hike rates again to tame inflation

India's central bank is set to hike interest rates this week for a second time in just under a month in an attempt to check near double-digit inflation, analysts say.
Annual wholesale price inflation, the main cost-of-living measure, is riding at a 17-month high of 9.90 percent, exceeding the Reserve Bank of India's forecast of 8.5 percent, well above its preferred 5.5 percent pace of increase.
India's central bank "is virtually certain to tighten again" at its policy meeting next Tuesday, said Kevin Grice, economist at Capital Economics.
Economists fear inflation in Asia's third-largest economy could accelerate as demand for cars, appliances and manufactured goods rebounds with economic growth gaining pace, shaking off the effects of the global slump.
Indian inflation has been rising in past months due to spiralling food costs after farm output was hit by the country's worst monsoon in nearly four decades last year.
But now food inflation is spilling over into the general economy as activity accelerates, pushing the central bank to act, anlaysts says.
Economsts expect the Reserve Bank to raise two key short-term interest rates by 25 basis points at its policy meeting Tuesday.
The interest rate cycle is turning in Asia as the region's economies recover from the deep global recession.