Inflation at 7.24% in Nov, below expectations: Expert views
India's wholesale price index rose a slower-than-expected 7.24 percent in November from a year earlier, government data showed on Friday.
December 14, 2012 / 12:24 IST
India's wholesale price index rose a slower-than-expected 7.24 percent in November from a year earlier, government data showed on Friday.
Analysts on average had expected an annual rise of 7.6 percent. The annual reading for September was revised up to 8.07 percent from 7.81 percent earlier.Also Read: Here`s how much inflation has axed your tax benefits in last 6 yrsCOMMENTARY:ROBERT PRIOR-WANDESFORDE, ECONOMIST, CREDIT SUISSE, SINGAPORE"It's the second consecutive pleasant surprise."I think maybe this is the first sign we're getting another downward leg in inflation. This is something we've been anticipating for some time."I think it's going to fall further. I'm looking for the headline rate to come below 7 percent in February. I think it will come below 6 percent from around the middle of 2013, which in turn sets us up quite nicely for not just one RBI rate cut at the January meeting but perhaps a series of reductions."RUPA REGE NITSURE, CHIEF ECONOMIST, BANK OF BARODA, MUMBAI"Today's data primarily reflects reduced pricing power of manufacturing companies on the back of severe demand slowdown. This means, despite the festival season, manufacturing companies were not able to pass on increased cost pressures to the consumer."It's a definite sign of moderating inflation on account of growth slowdown yet the number is quite high per se. And, I don't think the RBI will be in a position to reduce policy rates on December 18."But the probability of a rate reduction in the month of January has now gone up."A PRASANNA, ECONOMIST, ICICI SECURITIES PRIMARY DEALERSHIP, MUMBAI"Given the food and manufacturing prices are much better behaved than what many private analysts had predicted, we expect inflation by March-end to be sub-7 percent. The slowdown in manufacturing inflation in the last couple of months has a more positive impact compared with the rupee depreciation and we expect RBI to cut rates in the March quarter."There is nothing that should stop them from cutting rates in December barring the fact that headline WPI can go up for one month due to base effect and RBI could be more concerned about the optics when it wants to cut rates."BACKGROUND- The headline inflation data will be the critical factor for the Reserve Bank of India's scheduled monetary policy review on December 18. A Reuters poll released on Thursday showed economists expect the central bank to keep interest rates unchanged, with respondents split over whether it will cut the cash reserve ratio for banks.- The RBI has kept interest rates on hold since April because of stubborn inflation, defying calls from business and politicians for help in fighting a slump that has dragged the economy toward its slowest growth in a decade.- Annual consumer price inflation accelerated to 9.90 percent in November from the previous month, government data showed on Wednesday. The retail inflation is the highest among the BRICS group of emerging economies - Brazil, Russia, China, and South Africa - and is above what the RBI calls its comfort level.- A surge in manufacturing output pushed industrial growth to its highest in more than a year in October, a sign that Asia's third largest economy may have turned a corner that strengthens the central bank's case against a rate cut. Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
