India’s wholesale prices fell more than economists estimated, boosting the odds of a third inter-meeting interest rate cut from the central bank this year.
The index declined 2.33 percent in March from a year earlier, the Commerce Ministry said in a statement in New Delhi on Wednesday. That’s steeper than the 2.1 percent drop predicted by the median estimate in a Bloomberg News survey, and is the lowest in data going back to 2005.
The data follow the Reserve Bank of India’s favored consumer-price gauge, which also eased last month. Central bank Governor Raghuram Rajan held the benchmark repurchase rate at 7.5 percent last week and said he’d wait for data showing the balance of risks to inflation before moving again.
“As far as input price pressures are concerned, those remain muted,” said Devika Mehndiratta, an economist at ANZ Banking Corp. in Singapore. If food prices don’t shoot up this month, “RBI may well go and give another rate cut at or even possibly before the June meeting,” she said.
Rajan will next review policy on June 2. While the central bank forecasts consumer-price inflation to stay below its 6 percent target for January, risks stem from crop damage after unseasonal rains this year, Rajan said on April 7.
Consumer prices rose 5.17 percent in March from a year earlier after climbing 5.37 percent the previous month, government data showed on Monday. Rajan has said a real rate of 1.5 to 2 percentage points would be reasonable for India.
The yield on India’s benchmark 10-year sovereign bond fell to 7.77 percent as of 12:30 p.m. in Mumbai from 7.80 percent on Monday and the rupee rose 0.2 percent to 62.3975 a dollar. Indian markets were shut Tuesday for a local holiday.