India Inflation


Inflation falls to lowest level this year

In October, the consumer price index for industrial workers (CPI-IW) jumped 1.12% over the previous month, which doubled the 0.56% increase tallied in September. Despite the monthly spike, annual consumer price inflation inched down from 9.8% in September to 9.7% in October. Meanwhile, the more recent and comprehensive wholesale price index (WPI) showed price pressures easing, giving the Central Bank room to pause the tightening cycle. In November, the WPI added 0.42% over the previous month, which came in above the 0.14% increase observed in October and was virtually in line with market expectations. Annual wholesale inflation fell from 8.6% in October to 7.5% in November, which represented the lowest level of inflation since December 2009. Nonetheless, the trend remained flat, with annual average wholesale price inflation remaining unchanged at October's 8.6%, after 12 consecutive months of increases. The monthly wholesale price increase was mainly the result of higher prices for non-food primary articles (+3.9% month-on-month), which include raw materials such as jute, silk, cotton and rubber. Food price inflation eased somewhat, with food prices rising a subdued 0.1% in November after an increase of 0.6% rise in October. The Reserve Bank of India expects wholesale price inflation to moderate to 5.5% (recently revised from the previous 6.0% estimate) by the end of the current fiscal year, which concludes in March 2011.


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