In­dia’s whole­sale prices decline for 7th con­sec­u­tive month

The China Post - - BUSINESS INDEX & -

In­dia’s whole­sale in­fla­tion fell for a sev­enth con­sec­u­tive month, but the pace of the drop slowed as fuel and food prices rose, gov­ern­ment data showed on Mon­day.

The Whole­sale Price In­dex (WPI), an in­fla­tion in­di­ca­tor which mea­sures the big­gest bas­ket of goods, fell a less-than-ex­pected 2.36 per­cent in May from a year ear­lier.

Econ­o­mists sur­veyed by Bloomberg had ex­pected the WPI to slump 2.50 per­cent af­ter a 2.65 per­cent drop in April.

The fig­ures came af­ter data on Fri­day showed that con­sumer price in­fla­tion data had in­creased to 5.01 per­cent from 4.87 per­cent in April.

An­a­lysts said the num­bers re­in­forced their be­lief that In­dia’s cen­tral bank would not cut in­ter­est rates un­til the mon­soon ends in late Septem­ber.

“The risk of a flare up in food price in­fla­tion re­mains due to the pre­dic­tion of a be­low nor­mal mon­soon,” said Arun Singh, se­nior econ­o­mist at re­search firm Dun & Brad­street.

The Re­serve Bank of In­dia has a tar­get of bring­ing in­fla­tion con­sis­tently be­low 6 per­cent by Jan­uary 2016, and to 4 per­cent for the 2016-17 fi­nan­cial year.

It has sliced 75-ba­sis points of its key in­ter­est rate al­ready this year and re­cently took the un­usual step of urg­ing the gov­ern­ment to en­sure ad­e­quate stock­piles of food to sus­tain the coun­try and keep prices low af­ter the sum­mer mon­soon.

Mon­soon rains are vi­tal for In­dian crops and a par­tic­u­larly dry sea­son can re­duce farm out­put, rais­ing food prices which can be crip­pling for the tens of mil­lions of In­dia’s poor.

In­dia’s econ­omy out­grew China’s in the first three months of 2015, ben­e­fit­ing from the drop in oil prices.

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