By Jason Theodorou

India's double-digit inflation remained high in June, building to an annual rate of 10.55% - which has created pressure for another interest rate rise later this month. The inflation increase was due to a rise in fuel costs, along with a rise in food prices.

Prime Minister Manmohan Singh last month publicly stated that high prices were having a considerable toll on the country's 1.2 billion people, and he said that inflation would be eased to 5.6% by the end of 2010.

The Reserve Bank of India is expected to further tighten monetary policies, due to a consistent rise in prices and limited capacity in factories. The bank raised rates by a quarter point, its third hike this year.

Wholesale prices have risen by 10.55% in June, according to data released on Wednesday. A combination of rising incomes, low agricultural yields and a rapidly expanding domestic economy have seen prices increase by 10.16% in May.

The government has faced increased criticism for implementing a high growth strategy at the cost of India's most vulnerable citizens, who have their lives deeply affected by price rises. The Bharatija Janata party, who are in opposition, have staged a protest in Delhi over high prices.

Some analysts predict that the repo rate, a rate at which the central bank lends to commercial banks, will rise by a further 75 points from the current rate of 5.50% by the end of 2010.


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