Inflation declines to 7.24% due to lower vegetable prices

Dec 14 2012, 16:44 IST
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Food inflation, as a category, rose to 8.5 per cent during the month, from 8.32 per cent a  year ago. Food articles have 14.3 per cent share in the WPI basket. (Reuters) Food inflation, as a category, rose to 8.5 per cent during the month, from 8.32 per cent a year ago. Food articles have 14.3 per cent share in the WPI basket. (Reuters)
SummaryVegetables prices decreased by 1.19 per cent in November this year.

raising hopes a long slide in India's economic growth is coming to an end.

However, the economy is still headed for the weakest full-year growth in a decade, at about 6 percent, far below the near double-digit pace before the global financial crisis.

The Reserve Bank of India (RBI) has not lowered interest rates since April because inflation has remained near 7 percent, exacerbated by a weak rupee that has added to the cost of fuel imports.

The central bank has said any interest rate cut is "highly improbable" at the policy meeting on Tuesday. But given the sharply lower number, some analysts now see an outside chance the bank will change its mind.

"Given the food and manufacturing prices are much better behaved than what many private analysts had predicted, we expect inflation by March-end to be sub-7 percent," said A Prasanna, an economist at ICICI Securities in Mumbai.

"There is nothing that should stop them from cutting rates in December," Prasanna said.

Rating agency Standard & Poor's warned again on Tuesday that India's credit rating faces a one-in-three chance of being downgraded to junk over next 24 months because of a heavy debt burden and pressure on the fiscal deficit, which is seen overshooting a target of 5.3 percent in the fiscal year ending in March.

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