Sustained food inflation is a credit-negative for India because it aggravates the country's macroeconomic challenges and curtails the central bank's ability to cope with monetary issues, Moody's Investors Service said on Monday.

In its credit outlook report, global rating agency Moody's said that sustained food inflation worsened India's macroeconomic challenges of declining growth, rate of inflation and fiscal deficit and current account deficit.

The agency added that the current pace of food inflation in India is faster than the global average.

Commenting on the situation, the agency said, "Moreover, although food inflation is not desirable anywhere, it has particularly credit negative implications for India because of its economic structure and policy framework."

High rate of food inflation is hurts consumption, the balance of payments, monetary policy flexibility and government finances.

According to the Wholesale Price Index (WPI) for February, food inflation jumped 11.4 per cent year-on-year, pushing overall rate of inflation for the month to 6.8 per cent.

However, Moody's has assigned a "stable" outlook on India, while Fitch and S&P have downgraded their respective outlook from "stable" to "negative."