Wholesale price inflation surprises analysts, eases to 6.62%

Feb 14 2013, 21:24 IST
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Analysts had expected wholesale prices, India's main inflation gauge, to rise an annual 7 per cent. (Reuters) Analysts had expected wholesale prices, India's main inflation gauge, to rise an annual 7 per cent. (Reuters)
SummaryAnalysts expected wholesale prices, India's main inflation gauge, to rise an annual 7%.

time going ahead."

ANUBHUTI SAHAY, ECONOMIST, STANDARD CHARTERED BANK, MUMBAI

"The number is lower than expected and manufacturing inflation has surprised on the downside. It is interesting to note that something in commodities like sugar has pushed manufacturing product inflation lower. And core has marginally corrected further to 4.1 percent from 4.2 percent. With this inflation print, we are still maintaining 25 basis points call of a rate cut from RBI on March 19. There is at least a positive on WPI although retail CPI is still elevated."

ANJALI VERMA, ECONOMIST, PHILIPSCAPITAL, MUMBAI

"It should bode well for RBI. Our expectation is that inflation will ease more to 5.5-5.8 percent by fiscal year end. However, the RBI is also now worried about other variables like current account and fiscal deficits in policy making.

"My call is a rate cut will be likely in March or April by another 25 basis points."

UPASNA BHARDWAJ, ECONOMIST, ING VYSYA BANK, MUMBAI

"The inflation number for January is a pleasant figure. The moderating core inflation despite hike in the diesel prices for bulk consumers in the middle of the month would create room for RBI to cautiously cut the repo rate by 25 bps in the March policy."

SHAKTI SATAPATHY, FIXED INCOME ANALYST, AK CAPITAL, MUMBAI

"The print is more in line with our expectation and a result of lower readings in crude and manufacturing indices. Today's number might give a short-term respite for the forthcoming repo cut in the March RBI policy.

"However, the central bank would adopt a cautious approach resulting from consistent worries over imported inflation and higher current account deficit. We expect the bonds to trade rangebound with a downward bias in yields until March primarily in anticipation of a rate cut and timely OMOs (open market operations)."

A PRASANNA, ECONOMIST, ICICI SECURITIES PRIMARY SECURITIES DEALERSHIP, MUMBAI

"This shows that finally inflation is easing and fits with the growth slowdown. I think March inflation will be lower than RBI's projection and that should give RBI the comfort to cut rates by 25 basis points in March. Also, the revision trends are softening and so there could be a marginal upward revision if at all, to the January number. This number will strengthen the rate cut expectations going ahead."

MARKET REACTION

The 10-year government bond yield fell 3 basis points to 7.81 percent after the data.The one-year OIS swap rate was at 7.60 percent, according to traders, down 4 bps from its previous close and

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