Inflation in India Continues To Decline
Inflation in India continues to fall and during the last week of December came in at 5.91 per cent compared to 6.38 per cent from a week earlier, representing a 0.47 per cent decline.
A Reuters news agency poll of economists predicted that India’s inflation would decline to a 10 month low during the last week of December.
Food supply has improved, and the Government cut fuel prices at the start of December which have both worked themselves into the broader economy. The median forecast of 10 economists was for a 6.09 per cent rise in the wholesale price index in the 12 months to December 27, compared with 6.38 per cent in the previous week.
“We expect a drop in inflation on account of improved availability of primary articles, second-round effects of fuel price cuts in the first week of December, deflation in certain manufactured products prices and a sharp fall in crude oil prices in international markets during this week,” said Rupa Rege Nitsure, chief economist at Bank of Baroda, earlier.
Inflation raced into double digits in June after the government lifted fuel prices and peaked at 12.91 per cent on August 2, forcing the RBI to raise the repo rate to a seven-year high of 9 per cent.
Since the official lending rate hit its highs, the Indian central bank has cut the repo rate by 350 basis points as part of its monetary stimulus strategy which has been enacted to alleviate sharply moderating economic growth, which according to official estimates, will fall by as much as 2 per cent. The RBI now expects the inflation rate to be significantly lower than its March-end target of 7 per cent, whilst most analysts expect it to be closer to 2 per cent.
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