NEW DELHI (Reuters) -India’s wholesale inflation slowed in November to 1.89% year-on-year, easing from the previous month, due to a smaller increase in food prices, government data showed on Monday.
The wholesale inflation rate, a proxy for producer prices, last month came in lower than the 2.2% forecast by economists in a Reuters poll, and down from a four-month high of 2.36% in October.
Food prices rose 8.92% in November, compared with an 11.6% increase in October, with vegetable prices climbing 28.57% year-on-year, down sharply from a 63% jump in the previous month. Meanwhile, cereal prices rose 7.81% last year versus a 7.9% rise a month ago.
Prices of manufactured products, which account for about 64% of the wholesale price index, increased 2% from a 1.5% jump in the previous month.
Fuel and power prices in India dropped 5.83% year-on-year, compared with a 5.8% decline in October.
Headline retail inflation, the key target for the Reserve Bank of India (NS:)’s monetary policy decisions, eased to 5.48% in November, down from 6.21% in the prior month.
The softer retail inflation rate, combined with a sharp slowdown in the GDP growth to a seven-quarter low in July-September, has lifted expectations of a rate cut by the central bank at its February meeting, which will be chaired by new RBI governor Sanjay Malhotra.
Earlier this month, the RBI left its interest rates unchanged but lowered the cash reserve ratio requirements for banks to ease monetary conditions and support economic growth.
