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14
January 2019
 |
Inflation (The
Total Investment & Insurance Solutions)
India’s wholesale inflation
eased to an eight-month low in December, strengthening views among some
economists the central bank could ease its monetary policy stance next month as
the country faces a slowdown in manufacturing.
Annual wholesale price inflation edged down
to 3.80 percent last month, as food prices hardly rose and fuel cost increases
almost halved, government data showed on Monday. The outcome was lower than a
provisional 4.64 percent rise in November and below a 4.42 percent increase
forecast by economists in a Reuters poll.
The Reserve Bank of India’s Monetary Policy
Committee, which mainly monitors retail inflation data and kept interest rates
unchanged at a meeting last month, will have leeway to soften its monetary
stance at its Feb. 7 meeting, economists say.
“With wholesale and retail inflation easing,
we expect the RBI to soften its monetary policy stance at its next meeting,”
said Devindra Kumar Pant, chief economist, India Ratings and Research, the
Indian arm of Fitch Ratings.
Retail inflation data will be released later
on Monday and economists have projected prices may have eased to its lowest
since June 2017.
Annual growth in India’s industrial output in
November slumped to 0.5 percent from an upwardly revised 8.4 percent in
October, on a slowdown in auto and garment manufacturing. The economic weakness
is a problem for Prime Minister Narendra Modi, who has already been struggling
to meet ambitious job creation targets, ahead of an election, which has to be
held by May.
India’s total passenger vehicle sales for
December fell 0.43 percent to 238,692 units from a year earlier, data released
by the Society of Indian Automobile Manufacturers (SIAM) showed.
Wholesale food prices in December remained
almost flat, up 0.07 percent from a year earlier compared with a 1.96 percent
fall a month earlier. The figures indicate that rural incomes remain under
pressure while consumers are benefitting from easing inflation.
Anger among farmers contributed to the defeat
of Modi’s Bharatiya Janata Party in three key state elections late last year.
“A deflationary trend in many food items for
the last few months only shows that farmers’ incomes are not rising,” said
Pant.The Total Investment &
Insurance Solutions
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