The Indian government has raised interest rates unexpectedly in an attempt to lower consumer prices.
The Reserve Bank of India (RBI) raised the interest rates from 7.75% to 8%.
The Indian wholesale price index (WPI), the country's main measure of inflation, rose by 6.16% in December compared with the a year earlier. And the country's consumer price index (CPI) saw an increase of almost 9.9%.
In an election year, the Indian government is keen to drive down the high prices caused by the inflation as measured by CPI.
In a statement, the RBI said: ""Inflation excluding food and fuel has also been high, especially in respect of services, indicative of wage pressures and other second-round effects.
"Elevated levels of inflation erode household budgets and constrict the purchasing power of consumers. This, in turn, discourages investment and weakens growth."
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