Indian inflation raced to its highest level in 13 years, accelerating to over 11 percent after a fuel price hike, according to data Friday that piled pressure on the government as general elections loom.
   
Annual inflation in the world's second fastest-growing economy jumped to 11.05 percent for the week ended June 7 from 8.75 percent a week earlier,  stunning economists who forecast it would be around 9.8 percent.
   
It also pushed Indian shares down more than 500 points to their lowest close of the year on fears of more interest rate hikes.
   
The "double-digit shocker," as one Indian TV news channel dubbed it, was driven by a sharp increase in state-set fuel and cooking gas prices and rises in such basic foods as cooking oil.
   
"Nobody had expected an 11 percent out-turn," said HSBC economist Robert Prior-Wandesforde, adding "we very much doubt inflation has peaked."
   
"With the general elections fast approaching... the government's worst inflationary nightmares are coming true," he said.
   
The ruling Congress-led coalition desperately wants to tame prices, fearing a voter backlash in national elections due by May 2009. Indian political wisdom holds that when the price go up, "politicians weep."
   
The opposition Hindu nationalist Bharatiya Janata Party (BJP) signalled it would make rising prices, which have hit India's teeming poor the hardest, a key poll issue and demanded Prime Minister Manmohan Singh's resignation "on behalf of the nation."
   
Finance Minister Palaniappan Chidambaram blamed surging global fuel and other commodity prices, saying "these are difficult times" and promised "to look at stronger measures."
   
But analysts said the government had little left in its fiscal arsenal -- it has already banned exports of staple foods to boost supplies and check inflation.
   
The new numbers came as governments around the world battle rising prices. Malaysia Premier Abdullah Ahmad Badawi this week warned of a "real disaster" unless bold steps are taken to tackle the inflation crisis, forecasting a global recession as prices of food and fuel soar.
   
China is groaning under the worst inflation in a dozen years at 7.7 percent and a hefty fuel price hike Friday could push it higher.
   
The Indian data incorporated for the first time its fuel price rise announced earlier in June aimed at stemming huge oil company losses.
   
Inflation is the highest since May 6, 1995, when it stood at 11.11 percent.
   
"We're getting into very dangerous territory," said HDFC economist Abheek Barua. Prior-Wandesforde said inflation could "remain in double-digits for at least nine months." Some economists saw it rising to at least 12 or 13 percent.
   
"There needs to be significant further tightening," said Goldman Sachs economist Tushar Poddar.
   
Several economists forecast a half point rise in India's leading short-term lending rate, the repo, along with other aggressive credit-tightening measures -- possibly within a few days. The data came just a week after the bank hiked the repo rate by a quarter point to 8.00 percent, a six-year high.
   
The benchmark Mumbai 30-share Sensex index closed down 516.7 points or 3.42 percent at 14,571.29 as investors feared more rate hikes could slow the economy, hitting profits.
   
The economy grew nine percent in the past fiscal year but some economists expect expansion to slow to seven percent or lower this year due to monetary tightening and the global downturn.
   
Governments around the world should "come together" to tackle inflation, said the Confederation of Indian Industry.
   
"It is not just India but most large economies which have a lot to lose if the global price pressures continue."