India’s Inflation Eases, Supporting Rate-Cut Calls Before Reviewby
India’s consumer inflation eased to a 14-month low, supporting calls for an interest rate cut when Governor Urjit Patel reviews policy next month.
- Consumer prices rose 4.2 percent in October from a year earlier, the Statistics Ministry said in a statement on Tuesday
- That compares with the 4.15 percent median estimate in a Bloomberg survey of 30 economists and September’s revised upwardly 4.39 percent increase
- The consumer food price index rose 3.32 percent compared with 3.96 percent the previous month
- Wholesale prices rose 3.39 percent in October, the Commerce Ministry said earlier in the day, slower than the 3.74 percent predicted in a separate survey
Economists are concerned that Prime Minister Narendra Modi’s surprise cash clampdown will slow both growth and inflation in the $2 trillion economy. The softening price pressures will boost calls for monetary easing and investors will closely watch gross domestic product data due Nov. 30. Patel’s rate-setting panel, which lowered the benchmark repurchase rate to 6.25 percent from 6.5 percent in October, is due to review policy Dec. 7.
- "As of now, we expect the RBI to cut the rate during the first quarter of 2017, though we do see upside risk of a cut during the December meet," said Kunal Kundu, an analyst at Societe Generale SA.
- The decline in the consumer food price index was led by a 5.7 percent drop in the cost of vegetables
- Egg prices increased 9.4 percent, meat and fish 6.2 percent; pulses and fruits both gained more than 4 percent
- Housing and education costs rose 5.2 percent; transport 3.4 percent; health 4.7 percent