Elevated inflation also affects export competitiveness and limits the extent to which the central bank can cut interest rates to help stimulate the economy, Moody's said.

WSJ: Moody's Says India's Food Inflation Credit Negative

The European Central Bank was set to tack in a dramatically different direction on monetary policy Thursday by slashing interest rates to help stimulate growth in the buckling euro zone economy.

FORBES: Market Scan

Over the past few months, India's consumer inflation has bucked a downtrend in wholesale inflation, constraining the central bank from lowering interest rates aggressively despite facing mounting pressure to make corporate borrowings cheaper and help stimulate an economy growing at its weakest pace in a decade.

WSJ: India Consumer Inflation Slows