Indian Inflation Rates: Declined as Expected - Interest Rate Cuts in Prospect?

India records a decline in wholesale inflation in November, as current government data show. The rate fell to 1.89% year-on-year, below the forecasted 2.2% and the four-month high of 2.36% in October. This is mainly due to the more moderate increase in food prices. While these rose by 8.92% in November, a sharp increase of 11.6% was recorded in October. A notable decline was observed in vegetable prices, which grew by 28.57% instead of 63% in the previous month. Cereal prices rose by only 7.81%, compared to 7.9% in the previous month. Among processed products, which make up about 64% of the wholesale price index, there was an increase of 2%, after a rise of 1.5% in October. Noteworthy is the decline in prices for fuels and energy, which fell by 5.83%, similar to the previous month's decrease of 5.8%. In retail, the inflation rate dropped to 5.48%, below the previous month's 6.21%. This development and the slowed GDP growth in the third quarter fuel hopes of a possible rate cut by the Indian central bank at its meeting in February. Under the leadership of the new RBI Governor Sanjay Malhotra, the central bank is expected to take measures to stimulate the economy. Already this month, the central bank has kept its key interest rates constant, but lowered the reserve requirements for banks to ease monetary conditions and promote growth.