NEW DELHI, INDIA - INDIA'S inflation rate accelerated to a 42-month peak of 7.57 per cent, driven by higher food costs, according to official data on Friday, dealing a fresh blow to the government.

Annual inflation quickened more than two-tenths of a percentage point to touch 7.57 per cent for the week ended April 19, up from 7.33 per cent a week earlier.

The prices of rice, milk, tea, and vegetables all rose as did some manufactured goods such as steel sheets used in construction.

High inflation has become a top political issue in India with taming prices the key goal of the Congress-led government, which faces general elections within a year and a clutch of state polls before then.

India's hundreds of millions of poor - whose support is vital at voting time - have been hit hardest by the inflation surge.

The latest rise was reported after India tightened monetary policy for the second time in two weeks on Tuesday and announced a slew of fiscal steps to boost food and metal supplies as it struggles to ease runaway costs.

Inflation in Asia's third-largest economy last hovered around these levels in late 2004 when the central bank embarked on an aggressive monetary tightening cycle.

The latest jump, measured by the Wholesale Price Index, India's most closely watched cost monitor, comes amid escalating global commodity prices.

The government has banned export of certain basic staples like rice and lentils and cut customs duties on other items to try to rein in inflation.

On Tuesday, the central bank hiked the percentage of funds banks must set aside, upping the cash reserve ratio by 25 basis points to 8.25 per cent, to reduce money for loans and try to check inflation. -- AFP