Bloomberg News

India Food Inflation Slows to Lowest Level in Almost Four Years

December 15, 2011

Dec. 15 (Bloomberg) -- India’s food inflation slowed to the lowest level in almost four years, boosting the central bank’s scope to pause record interest-rate increases.

An index measuring wholesale prices of agricultural products rose 4.35 percent in the week ended Dec. 3 from a year earlier, the commerce ministry said in a statement in New Delhi today. The increase is the least since February 2008 and compares with a 6.6 percent gain the previous week.

Asian policy makers from China to Indonesia have either cut borrowing costs or kept them on hold to shield their economies as Europe’s debt crisis threatens to trigger a global slump. The Reserve Bank of India may keep its repurchase rate unchanged in the policy meeting tomorrow, according to all 13 economists in a Bloomberg News survey.

“The momentum in food prices is clearly downward which we think will keep headline inflation trending down,” Goldman Sachs Group Inc.’s Mumbai-based analysts Tushar Poddar and Vishal Vaibhaw said in a note yesterday.

Goldman expects the Reserve Bank, which has raised borrowing costs 13 times since the start of 2010, to keep its repurchase rate at 8.5 percent tomorrow.

The yield on the 8.79 percent government bonds due November 2021 fell two basis points, or 0.02 percentage point, to 8.47 percent as of 11:51 a.m. in Mumbai. The rupee weakened 0.9 percent to 54.19 per dollar. The BSE India Sensitive Index dropped 1.1 percent.

Food inflation eased after prices of onions declined 46 percent in the week ended Dec. 3 from a year earlier, today’s report showed. Potato costs dropped 33.3 percent and wheat slid 4.4 percent.

India’s benchmark wholesale-price inflation index rose 9.11 percent in November from a year earlier, the commerce ministry said yesterday, the lowest level in a year.

--With assistance from Kartik Goyal in New Delhi Editors: Cherian Thomas, Sunil Jagtiani

To contact the reporter on this story: Tushar Dhara in New Delhi at tdhara1@bloomberg.net.

To contact the editor responsible for this story: Stephanie Phang at sphang@bloomberg.net.


Burger King's Young Buns
LIMITED-TIME OFFER SUBSCRIBE NOW

(enter your email)
(enter up to 5 email addresses, separated by commas)

Max 250 characters

 
blog comments powered by Disqus