Preview: India's January inflation likely at more than 3-year low
Still, the headline rate will probably remain well above the Reserve Bank of India's perceived comfort zone of around 5 per cent for a while, giving the central bank little room to ease monetary policy aggressively.
Wholesale prices rose 7.0 percent in January from a year earlier, the lowest rate since November 2009, and a tad slower than December's three-year low of 7.18 percent, according to a forecast of a Reuters poll of 31 economists taken over the past week.
Forecasts for the index, due on Thursday around 0630 GMT, ranged from 6.24 percent to 7.40 percent.
The RBI cut its key lending rate in January for the first time in nine months to support a slowing economy but said further easing would depend on both the gaping current account deficit and inflation moderating further.
"On a seasonal basis, January is a month where we see manufacturing prices rise, and it usually happens because in the run up to the budget manufacturers often pass on prices to consumers in anticipation in changes to taxes," said Yuvika Oberoi, economist at Yes Bank.
"In this time of the economic cycle, given how demand in the economy is, the ability to pass through prices is very limited."
Prices of manufactured goods, which has a 65 percent weighting in the headline rate, led the slowdown in the inflation rate in December.
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