Mumbai, Dec 16: India's wholesale inflation rate fell to a five-and-a-half-year low, driven by ongoing falls in fuel and food prices, data showed on Monday (Dec 15), boosting hopes of an interest rate cut early next year.
The Wholesale Price Index, India's inflation measure with the biggest basket of goods, slipped to a lower-than-expected zero per cent in November from a year earlier, official data showed.
The latest WPI compares with a five-year-low of 1.77 per cent recorded in October, and was below analysts' estimates of about 1.1 per cent. India, which relies heavily on fuel imports, is seen as benefiting from tumbling global oil prices.
The data follows figures released on Friday which showed consumer inflation slowed to 4.38 per cent, a three-year low, while industrial output contracted, putting pressure on the central bank to cut rates.
Finance Minister Arun Jaitley is hoping for a cut in borrowing costs to boost investment and stimulate the faltering economy, which is mired in the longest slowdown in a quarter century.
This month, the Reserve Bank of India (RBI) said a cut in its benchmark repo rate now would be "premature", but a reduction was very likely in early 2015 if inflation continued to fall.
Consumer inflation was riding at over 10 per cent last year but economists say RBI Governor Raghuram Rajan's aggressive policies to curb price rises appear to be paying dividends.
The economy grew by 4.7 per cent last year and the RBI expects it to expand by 5.5 per cent this year - far below the near double-digit growth needed to generate employment for tens of millions of new entrants to the job market.
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