Wholesale price inflation surprises analysts, eases to 6.62%
Fuel prices rose 7.06 per cent in January, compared to 9.38 per cent in December. A likely increase in prices of diesel and petrol will reflect in February inflation number, which will be available next month.
Commenting on inflation, Planning Commission Deputy Chairman Montek Singh Ahluwalia said: "Inflation is still above the comfort level and it should come down further".
Easing of inflation would provide much needed space to the Reserve Bank to lower policy rates going ahead. The RBI had projected March end inflation to be 6.8 per cent.
Although it is still above RBI's comfort zone of 5-6 per cent, the declining in the January inflation and subdued growth in industrial output could prompt a rate cut going forward.
Industry chamber CII said there was a need to address the supply side bottlenecks to increase availability of food stocks.
"The declining trajectory of both headline and core inflation has created sufficient room for RBI to cut its policy rates by 50 basis points in its review of monetary policy in March," CII Director General Chandrajit Banerjee.
The RBI is scheduled to come out with mid-quarter policy review on March 19.
"The mild moderation in core inflation, combined with the weaker-than-expected industrial performance in December 2012, boosts the likelihood of monetary easing in mid-quarter policy review in March," ICRA Senior Economist Aditi Nayar said.
The central bank had last month lowered interest rates by 0.25 per cent saying that with inflation showing signs of remaining range bound, it was now critical to arrest the loss of
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