India's Economic Momentum Sputters Amid Rising Food Prices

India's economic growth slowed to 5.4% in the July-September period, below analysts' expectations, due to weak urban consumption driven by rising food prices. Despite this, potential momentum is forecasted for the latter half of the fiscal year, bolstered by improved rural demand and government spending.

The Indian economy has experienced a significant slowdown, growing at just 5.4% in the July-September quarter, as revealed by recent figures. This is well below the anticipated 6.5% expansion, with the central bank's estimate pegged at 7%.

A primary factor contributing to this sluggish performance is weak urban consumption, owing to a surge in food prices, high borrowing costs, and limited real wage growth. Conversely, there is optimism for the second fiscal half, driven by improved rural demand following a strong monsoon and increased government spending.

Despite the deceleration, India maintains its position as one of the fastest-growing major economies, although some private economists are revising growth forecasts downward. Calls for interest rate cuts have emerged from India's finance and trade ministers, but the central bank is expected to maintain current rates amidst continuing inflation concerns.

(With inputs from agencies.)