Headline inflation declined to a 10-month low of 7.24 per cent in November, though remaining much above the comfort level (4-5 per cent) of the Reserve Bank of India.
Finance minister P Chidambaram expressed confidence that wholesale price index (WPI), the main gauge for inflation, will further moderate in the next two to three months. “Inflation is a challenge. Inflation worries the government. While CPI inflation is sticky, good news is that WPI inflation seems to be trending downwards ... If it trends downwards, there will be some reason for comfort,” he said in Parliament.
The decline in WPI is likely to be factored in by the RBI when it comes out with its monetary policy review on December 18.
Yesterday, RBI deputy governor KC Chakrabarty had said cutting the repo rate will be possible only when inflation comes down.