Inflation seen at 4.43 pct on Jan 31

Inflation rate is forecast to have fallen to its lowest in over a year at the end of January.

Written by Reuters | Mumbai | Published: February 11, 2009 12:30:45 pm

India’s annual inflation rate is forecast to have fallen to its lowest in just over a year at the end of January due to a cut in state-set fuel prices,a Reuters poll showed on Wednesday.

The median forecast of 11 analysts was for a 4.43 per cent rise in the wholesale price index in the 12 months to Jan. 31,compared with 5.07 per cent in the previous week.

If realised,it will be the lowest annual rise since Jan. 12 last year,when inflation was at 4.36 per cent. The data is due around noon (0630 GMT) on Thursday.

“We have seen almost an 18 point correction in the fuel price index,which is essentially being the driver of this week’s inflation number,” said Shubhada Rao,chief economist at Yes Bank.

India cut retail fuel prices by up to 11 per cent in the last week of January,its second reduction in nearly two months.

Inflation had raced into double digits in June last year after the government raised state-set fuel prices,and peaked at 12.91 per cent on August 2.

The central bank expects annual inflation to be below 3 per cent by the end of the 2008/09 fiscal year in March,with some analysts even expecting it to be below 2 per cent.

“Overall,very clearly,the trend is that of a lower inflation. It is moving close to below 2 per cent by end-March,” Rao said.

The wholesale price index is more closely watched than the consumer price index (CPI) because it includes more products and is also published weekly. The CPI is released monthly.

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