MUMBAI: Oil markets helped India post slower than expected wholesale price inflation in 2014. The wholesale price index (WPI) rose 0.11 percent year-on-year compared with 0.6 percent jump forecast by economists in a Reuters poll.
Data released showed consumer price inflation quickened at a slower-than-expected pace of 5 percent in December, remaining well within the Reserve Bank of India’s (RBI) medium-term target of 6 percent.
With a near 60 percent fall in global oil prices since last June and food prices remaining in check despite poor monsoon rains last summer, some analysts expect the RBI to reduce its repo rate at a policy review on Feb. 3. The repo rate has stood at 8.0 percent for the past year.Falls in commodity prices have brought down WPI, CPI (consumer price index) alike,” said Aneesh Srivastava, chief investment officer at IDBI Federal Life Insurance.
Wholesale fuel prices fell an annual 7.82 percent last month, their biggest fall since September 2009. Month-on-month, the prices were down 2.4 percent.Similarly, food prices recorded a 1.9 percent fall in December from a month earlier. However, they were up 5.2 percent year-on-year compared with a 0.63 percent gain in November.
All indicators now point that the RBI should cut rates by at least 25 basis points in its next policy meeting on Feb. 3,” said Srivastava.However, some analysts say RBI Governor Raghuram Rajan may delay the rate cuts amid mounting concerns over the government’s fiscal health.
