New Delhi, November 13
The inflation slowed to a five-month low, giving RBI further room to cut interest rates in an effort to help protect the economy from a global slowdown.
The wholesale price index rose 8.98 per cent in the 12 months in the week ending November 1, sharply below the previous week's annual rise of 10.72 per cent and the predicted median forecast of 10.28 per cent.
Declining oil and commodity prices are cooling inflation across Asia, providing the region's policy- makers with scope to reduce borrowing costs to stimulate growth.
Inflation for the week ended September 6 was revised up to 12.42 per cent from 12.14 per cent. The annual inflation rate was 3.35 per cent during the corresponding week of the previous year.
Analysts pointed out that the sudden dip in the inflation would give the RBI Governor Duvvuri Subbarao a chance to add another rate cut after the one on November 1. If carried out, it would be the second rate cut in less than a month.
Experts did not rule out the possibility of another 150 basis-point cut in the repurchase rate. Besides, moderation in energy prices could help cool inflation to 5 per cent by March 2009, experts pointed out.
Elsewhere in Asia, inflation is also moderating. Consumer prices in China rose four per cent in October from a year earlier, the slowest pace in 17 months.
Data released by the government said the wholesale price index fell in the week to November 1 because of a decline in the prices of fuel products such as jet fuel, naptha and furnace oil. The energy index dropped after Indian oil companies, including Indian Oil Corp., the nation's largest refiner, cut the price of jet fuel by 17 per cent.
Today's inflation rate may be revised in two months, after the government receives additional price data.
Incidentally, the crude oil for December delivery dropped as much as $1.13, or 2 per cent, to $55.03 a barrel, and traded at $55.71 in the morning. Prices have tumbled 63 per cent since reaching a record $147.27 on July 11.
Meanwhile, India's industrial output rose 4.9 per cent in the six months to September from a year earlier, less than half the 9.5 per cent pace recorded in 2007. Exports grew 15 per cent in September, the slowest pace in 18 months.
