Industrial output may have fallen in October, but figures released on Wednesday show wholesale inflation remains higher than expected. The wholesale price index grew 9.11% in November. The previous month it stood at 9.73%. The modest decline in wholesale inflation was driven by a drop in food inflation. In November, food inflation was just eight-and-a-half percent compared to more than 11% in October. Meanwhile, Kaushik Basu, the chief economic advisor to the finance ministry has said he expects food inflation to fall below 3% over the next month.
Wholesale inflation remains stubbornly high; rupee falls to a new low; L.K. Advani’s Lok Sabha motion on black money is defeated
Still, the economic news gets worse. India’s rupee has fallen to yet another low. On Wednesday, the currency declined once again to end at 53.63 against the dollar. The previous day it closed a little higher at 53.23. India’s rupee remains Asia’s worst performing currency this year. Foreign funds continue to flow out and import bills continue to rise. But the government has admitted there’s little it can do. The Prime Minister’s top economic advisor C. Rangarajan said RBI’s options were limited because external factors were the main culprit.
And finally, markets ended in the red on Wednesday after a volatile trading session. Investors were hopeful the Reserve Bank won’t increase rates when it reviews them on Friday. But the latest inflation figures dampened sentiment. The Sensex dropped 121 points to 15,881. And the Nifty fell 37 to 4,763.