New Delhi:Inflation held near a 27-year low as commodity prices eased and demand slowed in an economy growing at the weakest pace in six years. Wholesale prices rose 0.57% in the week to 18 April from a year earlier after gaining 0.26% in the previous week, the commerce ministry said in New Delhi on Thursday. Economists expected a 0.13% increase.
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“Inflation is likely to turn negative from early May,” said Sonal Varma, an economist at Nomura International Ltd in Mumbai. “There has been a sharp fall in input-cost pressures and domestic demand remains weak, which suggests very low inflationary pressure at the moment.”
Easing inflation has enabled Reserve Bank of India governor D. Subbarao to cut borrowing costs to a record low to bolster the economy as the global recession hurts exports. The country isn’t experiencing deflation as consumer-price gains continue to be high, Varma said.
Consumer prices paid by industrial workers rose 9.63% in February from a year earlier, after gaining 10.45% the previous month, according to government data. Consumer-price inflation for farm workers was 10.79%.
Inflation gained more than economists expected in the week to 18 April as prices of pulses, vegetables, fruits, spices, sugar, cooking oil and minerals rose in the week, Thursday’s report showed. Manufactured-price inflation advanced 0.95% in the week from a 0.9% gain in the previous week.
The wholesale inflation rate published on Thursday may be revised in two months, after the government receives additional price data. The commerce ministry on Thursday revised the rate for the week ended 21 February to 2.99% from 3.03%.
Graphics by Paras Jain / Mint