Persistent inflation hurting India's sovereign ratings: Moody's

Mumbai: India`s sovereign ratings are constrained by persistently high inflation that is weighing on an otherwise promising economic recovery, Moody`s Investors Service said in a release on Thursday.

"Recurrent inflationary pressures ... keep domestic capital costs high, erode domestic purchasing power as well as savings and lower international competitiveness," the rating agency said.

Moody`s also said the supply response to inflation has been weak and the government-directed food distribution system has made worse the food supply constraints.

Without a significant increase in food output, the risk from continued inflation could limit India`s growth prospects, Moody`s said.