India food inflation at 13.39 pct on Oct 24

* Consumer price index up 11.64 pct in September

* Plan panel says food prices to moderate by year end

* Finmin says fiscal stimulus to stay until economy recovers

By Rajkumar Ray

NEW DELHI, Nov 5 - India's food prices rose 13.39 percent in the 12 months to Oct. 24, highlighting concerns that the index could stay high despite government efforts to keep a lid on prices.

The fuel group index fell 6.2 percent from a year earlier, reflecting a comparison with last year's spike in prices.

The normal weekly wholesale price index was not released on Thursday. The Commerce and Industry Ministry said it would now release that data monthly from Nov. 12.

Last week, the government said the wholesale price inflation was 1.51 percent in the 12 months to Oct. 17.

India's worst monsoon rains in nearly four decades and floods in parts of the country have hurt farm output and pushed up food prices, hindering a faster recovery of the economy.

"Bad summer crops will push up primary articles prices in the coming months," said N.R. Bhanumurthy, economist at National Institute of Public Finance and Policy. "The shortfall in summer crop will not be covered by expected high growth in winter crops."

The consumer price index , which has a heavy weight of food items, rose an annual 11.64 percent in September, lower than previous month's level.

On Wednesday, a top policy adviser said food price inflation was still a concern but it should moderate by the end of this year. [ID:nHKG338630]

The federal government last week increased the price at which it buys cane and rice from farmers to encourage higher domestic production, as it estimates an 18 percent decline in 2009/10 summer-sown grain output from a year earlier. [ID:nLT377836]

Last week, the central bank raised its inflation forecast to 6.5 percent for the end of 2009/10 fiscal year in March with an upward bias but left its policy rates unchanged. [ID:nDEL485971]

For a graphics on inflation, click: http://graphics.thomsonreuters.com/119/IN_INFL1109.gif

RISE IN RATES EXPECTED NEXT YEAR

Last week, the central bank laid the groundwork for a rise in interest rates by tightening credit to the commercial property sector and removed some of the emergency liquidity support measures that were extended to protect the economy from the global downturn.

After the policy review, a Reuters poll of 20 analysts found that nine of them expect an increase in the key repo rate by the end of January, when the RBI holds its next review, while all 20 expected a hike both in the repo and reverse repo rates by the end of April. [ID:nBMA006252]

On Tuesday, Finance Minister Pranab Mukherjee said India will maintain its fiscal stimulus due to uncertainty arising from the poor monsoon and the global outlook. [ID:nL3634290]

Policymakers have favoured continuation of fiscal stimulus and an easy monetary stance to help sustain growth and aid economic recovery.

Last week, the central bank forecast the economy would expand 6 percent in 2009/10, below 6.5 percent predicted by the prime minister's economic panel.

It grew 6.7 percent last year, slowing sharply from 9 percent or more between 2005/06 and 2007/08.