India’s inflation exceeded 9 percent for an 11th straight month, crimping the central bank’s scope to keep interest rates unchanged and shield the economy from a faltering global recovery.
The benchmark wholesale-price index rose 9.73 percent in October from a year earlier, the commerce ministry said in a statement in New Delhi today. That compares with a 9.72 percent jump in September and the median forecast of 9.65 percent in a Bloomberg News survey of 19 economists.
Fuel Costs
Indian Oil Corp., the nation’s biggest refiner, increased local gasoline prices on Nov. 4 for the third time in six months to stem losses, saying the rupee’s decline boosted costs.
The Reserve Bank of India on Oct. 25 said that its monetary tightening will help curb inflation and that the likelihood of a rate action in the December policy meeting is “relatively low.”
India’s inflation will start to decline from December and ease to 7 percent by March before moderating further in the first half of the next fiscal year starting April 1, according to the central bank. Beyond December, “if the inflation trajectory conforms to projections, further rate hikes may not be warranted,” the Reserve Bank said.
Growth Forecast
The Reserve Bank predicted India’s economy will expand 7.6 percent in the year ending March 31, lower than the 8 percent it estimated earlier.
Governor Duvvuri Subbarao has increased the central bank’s repurchase rate by 375 basis points since the start of 2010. That’s the fastest round of increases since the monetary authority was established in 1935, Bloomberg data show. The repurchase rate is 8.5 percent.
