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Mumbai - The aroma of frying onions from the Britannia restaurant in Mumbai may not penetrate the office of India's new central bank governor, Raghuram Rajan, a block away, but like the eatery's customers, he cannot escape the soaring price of the pungent vegetable.

The price of onions has added to Rajan's already full plate as the new head of the Reserve Bank of India wrestles over how to help stabilise the rupee exchange rate and tackle inflation without further dampening economic growth.

A former International Monetary Fund chief economist, Rajan took over at the central bank on September 4 in the middle of India's worst economic crisis in 20 years. He will announce his first monetary policy review today.

The US Federal Reserve's surprise decision on Wednesday not to wind down its massive monetary stimulus just yet helped the rupee to a one-month high yesterday, so inflation may have now moved up on his list of priorities.

Last month the cost of onions was 245 percent higher than a year earlier, while other vegetables shot up 77 percent, driving headline inflation to a six-month high. Onion prices have risen further this month, prompting the government to take steps to limit exports.

Eaten raw as a side dish, or blended into an array of curries, onions play a prominent role in Indian cuisine and public anger rises quickly whenever prices spike.

In Britannia, the pinch is being felt by customers who include employees of the Reserve Bank of India, who drop by to lunch on steaming plates of its famous Parsi berry pulav rice.

"Instead of one person eating one plate, two people are splitting. And three people are dividing two plates," said Boman Kohinoor, the 91-year-old joint owner of the restaurant.

The restaurant raised prices on its menu by between 30 rupees (R5) and 50 rupees earlier this year - a fragrant plate of rice-based chicken biryani now costs 350 rupees.

With overall food prices up an annual 18 percent last month, Kohinoor's new neighbour at the central bank will probably be careful not to stoke inflation in other areas, despite calls from industry to cut interest rates and lower borrowing costs. But in reality there is little Rajan can do to prevent the volatility.

Discount site Groupon offered onions at 9 rupees a kilogram earlier this month, a discount of as much as 90 percent, advertising the deal with the image of an onion in a jewellery case. Demand was so high its site crashed.

But Rajan, who had a lucky break when the Fed held off on tapering, may soon be in for another reprieve. After strong monsoon rains, some predict a bumper onion crop this year - and farmers are forecasting prices will drop sharply over the next few weeks. - Reuters