Mumbai: India’s wholesale price inflation rate is forecast at 3.94% for the 12 months to 18 August, its lowest in nearly 16 months, a Reuters poll of 11 analysts showed on 30 August.
Annual inflation in the previous week was at 4.10%, and had last dropped below 4% in April 2006.
It would be the eleventh consecutive week that inflation has remained below 5%, the central bank’s target for the 2007/08 fiscal year.
Last month, the Reserve Bank of India raised banks’ cash reserve ratio to 7% from 6.50% in a bid to mop up excess cash that could fuel inflation.
The central bank held its short-term lending rate steady at the monetary policy review in July, as expected, after raising it five times since mid-2006.
The central bank has also raised the ceiling on market stabilisation bonds, used to absorb funds generated by its currency intervention, by more than one-third to Rs1.5 trillion.
Annual inflation leapt to a more than two-year high of 6.69% in late January, but softened to 4.05% in early August after the central bank tightened policy and the government cut duties on a slew of items to cool prices.