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India's wholesale inflation drops 2.33% in March
[MUMBAI] India's wholesale inflation dropped for the fifth straight month on lower local food and manufacturing prices along with slumping global oil prices, data showed Wednesday.
The Wholesale Price Index (WPI), India's inflation measure with the biggest basket of goods, slipped to a sharper-than-expected 2.33 per cent in March from a year earlier.
The figure follows a 2.06 decline in February and was greater than a 2.10 per cent drop predicted by a Bloomberg survey.
The fall along with the slower-than-anticipated rise in consumer price inflation on Tuesday strengthened hopes for more interest rate cuts to spur economic growth, analysts said.
"The two inflation data points do increase chances of a rate cut from the Reserve Bank of India," said Sujan Hajra, chief economist for Anand Rathi Securities in Mumbai.
But Hajra said he expected RBI governor Raghuram Rajan to hold off until the impact of India's monsoon-rain-hit crops on food prices was known in August.
"By then the real picture of the monsoon would be clear as would the timing of a rate hike by the US Fed. And as it is the RBI has already cut twice and transmission is yet to happen," Mr Hajra said.
After two cuts so far this year, the RBI held rates unchanged at last week's policy meeting, citing the failure of commercial banks to pass on the previous cuts to its customers and lower borrowing costs.
Mr Rajan also flagged ongoing concerns about once-high inflation, which the former IMF chief economist has been working to bring down since taking the RBI's helm in 2013.
Indian business leaders have been asking for more rate cuts to help accelerate economic growth which the IMF forecast this week would outpace that of China's.
India has forecast growth of 7.4 per cent for the year which ended in March - overtaking China and making India the world's fastest growing major economy, after changing the way it calculates gross domestic product.
The figures have surprised many economists as India had been thought to be struggling through its worst economic slowdown since the 1980s.