India Inflation Rate Falls to 3 year low

Inflation in India declined to a three-year low in March, possibly allowing the central bank to keep cutting interest rates to help revive a sputtering economy.

Wholesale price inflation fell to 6 percent from 6.8 percent in February, according to provisional figures Monday from the Ministry of Commerce.

However, food prices were still rising sharply and were 8.7 percent higher in March than the previous year. Higher prices were particularly prominent in staples such as wheat, up 19.9 percent, and rice, which rose 17.9 percent. Fuel costs jumped 10.2 percent.

The central bank has cut borrowing rates twice this year to help jump start Asia’s third-largest economy but has been hesitant to move too aggressively for fear of making inflation worse.

Food and fuel are the biggest expenses for India’s poor.

The government has forecast 5 percent economic growth for the fiscal year that ended March, the slowest in a decade.

The bank, which meets on May 3 to decide whether another interest rate cut is needed, has pledged to bring overall wholesale inflation down to below 4.5 percent.

via Mainichi

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza