Wholesale inflation in April cooled further to -2.65 per cent, compared to -2.33 per cent in March, government data showed on Thursday. The inflation data based on wholesale prices eased more than expected, as a Reuters poll had estimated it to contract 2.30 per cent. This is the sixth straight fall in wholesale price index (WPI) inflation, mainly on the back of plunging oil prices.
Although, the Reserve Bank of India (RBI) mainly monitors inflation based on consumer prices, the positive wholesale data comes as a shot in the arm for India Inc, which has been making a case for further rate cuts by the central bank.
"The real worrying fact is the manufacturing prices are not going up which shows that nobody has pricing power at this stage so why should one keep the interest rates high?," Siddhartha Roy, economic advisor, Tata Group told NDTV. The prices of manufacturing products contracted 0.52 per cent compared to a 0.19 per cent contraction in March, data showed.
Earlier this week, data showed retail inflation cooled to a four-month low in April on slower annual increases in food costs and industrial output growth slipped to a five-month low in March, boosting odds for an interest rate cut by the central bank next month.
Retail prices rose 4.87 per cent year-on-year last month, their slowest pace since December, close to a 4.90 per cent annual rise predicted by analysts in a Reuters poll. In March inflation was 5.25 per cent, revised figures showed.
The RBI has cut rates by a 50 basis points or 0.50 per cent since January and is due to review them next month. It left rates unchanged in April, saying it would watch for transmission of previous rate cuts and price rises.
With inflation staying well below the 6 per cent upper end of the RBI's target range and growth momentum weakening, analysts are expecting the central bank to lower lending rates for a third time this year.
(With inputs from Reuters)
Although, the Reserve Bank of India (RBI) mainly monitors inflation based on consumer prices, the positive wholesale data comes as a shot in the arm for India Inc, which has been making a case for further rate cuts by the central bank.
"The real worrying fact is the manufacturing prices are not going up which shows that nobody has pricing power at this stage so why should one keep the interest rates high?," Siddhartha Roy, economic advisor, Tata Group told NDTV. The prices of manufacturing products contracted 0.52 per cent compared to a 0.19 per cent contraction in March, data showed.
Earlier this week, data showed retail inflation cooled to a four-month low in April on slower annual increases in food costs and industrial output growth slipped to a five-month low in March, boosting odds for an interest rate cut by the central bank next month.
Retail prices rose 4.87 per cent year-on-year last month, their slowest pace since December, close to a 4.90 per cent annual rise predicted by analysts in a Reuters poll. In March inflation was 5.25 per cent, revised figures showed.
The RBI has cut rates by a 50 basis points or 0.50 per cent since January and is due to review them next month. It left rates unchanged in April, saying it would watch for transmission of previous rate cuts and price rises.
With inflation staying well below the 6 per cent upper end of the RBI's target range and growth momentum weakening, analysts are expecting the central bank to lower lending rates for a third time this year.
(With inputs from Reuters)
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