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India's softer wholesale inflation opens door to monetary easing

Reuters  |  NEW DELHI 

By Kumar

NEW DELHI (Reuters) - India's wholesale inflation eased to an eight-month low in December, strengthening views among some economists the central could ease its monetary policy stance next month as the country faces a slowdown in

Annual wholesale price inflation edged down to 3.80 percent last month, as hardly rose and fuel cost increases almost halved, government data showed on Monday. The outcome was lower than a provisional 4.64 percent rise in November and below a 4.42 percent increase forecast by economists in a poll.

The Reserve of India's Monetary Policy Committee, which mainly monitors and kept interest rates unchanged at a meeting last month, will have leeway to soften its monetary stance at its Feb. 7 meeting, economists say.

"With easing, we expect the RBI to soften its monetary policy stance at its next meeting," said Devindra Kumar Pant, chief economist, Ratings and Research, the Indian arm of

will be released later on Monday and economists have projected prices may have eased to its lowest since June 2017.

Annual growth in India's industrial output in November slumped to 0.5 percent from an upwardly revised 8.4 percent in October, on a slowdown in auto and The economic weakness is a problem for Narendra Modi, who has already been struggling to meet ambitious job creation targets, ahead of an election, which has to be held by May.

India's total passenger vehicle sales for December fell 0.43 percent to 238,692 units from a year earlier, data released by the (SIAM) showed.

in December remained almost flat, up 0.07 percent from a year earlier compared with a 1.96 percent fall a month earlier. The figures indicate that rural incomes remain under pressure while consumers are benefitting from easing inflation.

Anger among farmers contributed to the defeat of Modi's in three key state elections late last year.

"A deflationary trend in many for the last few months only shows that farmers' incomes are not rising," said Pant.

(Editing by and Jacqueline Wong)

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

First Published: Mon, January 14 2019. 19:07 IST