India WPI Confirms Price Pressures Rising Before Rate Review

  • Wholesale prices fall 0.73% versus 1.15% estimated decline
  • Central bank is due to review interest rates on Feb. 2

India’s wholesale prices fell at the slowest pace in 12 months, signaling a return of inflationary pressures before Governor Raghuram Rajan’s first interest-rate review in 2016.

Wholesale prices fell 0.73 percent in December from a year earlier, the Commerce Ministry said in a statement on Thursday, compared with a 1.99 percent decline the previous month. The median of 30 estimates in a Bloomberg News survey had predicted a 1.15 percent decrease.

The wholesale-price deflation will probably end in January, said Jay Shankar, chief India economist at Religare Securities Ltd. "We don’t expect global commodity prices to come down significantly from current levels."

The release follows data earlier this week that showed gains in benchmark consumer prices accelerated to a 15-month high even as factory output dropped the most since 2011. That complicates matters for Rajan, who’s due to review rates on Feb. 2.

Food inflation rose 8.17 percent in December from a year earlier, while fuel and power declined 9.15 percent.

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