Business | Economy
India wholesale prices fall yet again
India's wholesale prices fell for a seventh straight week, ahead of an expected "creep up" in the inflation rate later this year that may force the central bank to raise borrowing costs.
- Bloomberg
- Published: 22:31 July 30, 2009
New Delhi: India's wholesale prices fell for a seventh straight week, ahead of an expected "creep up" in the inflation rate later this year that may force the central bank to raise borrowing costs.
The benchmark wholesale-price index declined 1.54 per cent in the week to July 18 from a year earlier after falling 1.17 per cent in the previous week, the government said on Thursday.
Prices retreated 1.61 per cent in the first week of June, the biggest drop since December 1978, according to central bank data.
The inflation rate will start to "creep up" from October and reach about 5 per cent by March next year, the Reserve Bank of India said on Tuesday.
That is more than an April estimate of 4 per cent and may require the central bank to "reverse" its expansionary policies, Governor Duvvuri Subbarao said.
"Our assessment is that the RBI is becoming cautiously optimistic on the growth outlook and more concerned about higher inflation," said Sonal Varma, who is an economist at Nomura Securities Co. in Mumbai.
Bonds fell. The yield on the 6.90 per cent note due July 2019 rose to 6.92 per cent as of 12.04pm in Mumbai, from 6.91 per cent before the report, according to the central bank's trading system.
Subbarao this week left the central bank's reverse repurchase rate unchanged at 3.25 per cent and maintained the repurchase rate at 4.75 per cent after cutting them by a quarter point each on April 21.
The central bank will maintain "an accommodative monetary stance until there are definite and robust signs of recovery," Subbarao said.
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