Is a negative, because it is through the filter, and the wider economy growth and the huge fiscal and current account deficits of the adverse consequences, for the country's sovereign credit rating, moody's said on Monday that mumbai (Reuters) - India's food inflation.
Moody's investors service is the only one the three credit agencies rate in India is "stable" outlook. From "stable" last year, Fitch Ratings, Fitch Ratings) and the standard & poor's Ratings services downgraded outlook to "negative" for India.
Rising food prices accelerated the broader inflation push up wages, and the government's finances have a negative impact, reduce the flexibility of monetary policy, moody's said in a report.
The report, S&P said last week, in the domestic economy growth doesn't support for India's sovereign ratings.
"Credit persistent food inflation is negative, because it intensifies the India's economic growth slowed, inflation is high reach large fiscal and current account deficit of the macro economic challenges," moody's said.
India, said last week that consumer price inflation rose 10.9% in February, accelerate slightly in January, and the wholesale price inflation rose 6.84% from the same period last year.
Despite food price inflation slowed to 11.38% last month to 11.88% in January, it stay in double digits, for the third consecutive month, temper any aggressive monetary easing expectations.
Moody's estimates, food accounted for more than 50%, the average consumption in India's economy relies heavily on private consumption, worry about it.
Last couple of quarters food inflation is also likely to push up wages, reduce the degree of by central Banks to cut interest rates, as well as reduce the competitiveness of the export and import competition in the industry.
Food inflation the country's budget deficit, the government support the price of a large part of population, moody's added.
Increase the food supply could be a solution, but India's rural poor infrastructure, low efficiency of food distribution and storage system and the restriction of the agricultural productivity, moody's also warned.
 



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