Feb inflation at 8.31% YoY
India's wholesale price index (WPI) rose an annual 8.31% in February on higher fuel and manufactured product prices, government data showed on Monday.
March 14, 2011 / 14:53 IST
India's wholesale price index (WPI) rose an annual 8.31% in February on higher fuel and manufactured product prices, government data showed on Monday.
The figure was well above the median forecast for a 7.79% rise in a Reuters poll and was higher than the annual rise of 8.23% in January. "The data came in stronger than expected, a trend that has been evident in Indian inflation data for much of the six months or so. Inflation is coming down but not at a pace quick enough for the RBI I would suspect. We have seen Indian equities trade a touch softer after the print but it hasn't been a dramatic move lower. Same goes for the currency. This reinforces our view that the RBI will raise the repo rate by 25 bps this Thursday," Jonathan Cavenagh, senior FX strategist, institutional FX sales, Asia, at Westpac Institutional Bank, Singapore:Market reactionThe partially convertible rupee eased marginally to 45.1625 per dollar from 45.1500 just before the inflation data. It had closed at 45.24/25 on Friday. The 10-year bond yield rose to 7.94% from 7.92% beforehand. It had closed at 7.95% in the previous session. The 30-share BSE index trimmed gains to be up 0.79% at 18,317.33 points. It had been up 1.05% beforehand.Background The Reserve Bank of India (RBI) has raised key lending and borrowing rates seven times since last March to stem inflationary expectations, and is expected to raise rates by another 25 basis points when it meets for the mid-quarter policy review on Thursday.Reserve Bank of India Governor Duvvuri Subbarao said last Thursday the central bank was struggling to balance growth and inflation, and was caught between arguments to keep rates low and to raise them. India's annual industrial output in January topped forecasts to grow an annual 3.7%, though Finance Minister Pranab Mukherjee said he was not satisfied.Economic growth slowed to 8.2% in the December quarter and is projected to expand 8.6% in 2010/11 ending March, and at around 9 percent next fiscal year, plus or minus 0.25%.The HSBC Markit Purchasing Managers' Index, an indicator of manufacturing expansion, edged up to a three-month high of 57.9 in February from 56.8 in January, the 23rd straight month it has been above 50 that divides growth from contraction. 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!
