India's Inflation Gives RBI Breathing Space

NEW DELHI—India's wholesale price inflation slipped in February as food prices cooled, giving policy makers some breathing space to consider eventually lowering interest rates to help revive growth. Inflation, as measured by the wholesale price index—which has traditionally been the main gauge for measuring inflation in Asia's third-largest economy—has come down to 4.68% from 5.05% in January, data released Friday by Ministry of Commerce and Industry showed. The slowing WPI follows a similar decline in consumer price inflation that fell to a new two-year low of 8.10% in February, according to data that was released Wednesday. Reserve Bank of India has said it would like to see WPI inflation below 5% and would like to bring down CPI inflation to 8% by January 2015. With the WPI and CPI both close to the RBI's comfort zone, it would give rise to hopes that the central bank may take steps to make credit cheaper in coming months and support growth, which has slowed to its lowest in a decade. The RBI has been an aggressive inflation fighter in the recent months as it feels that high inflation would do more damage to the economy than the higher interest rates needed to avoid overheating. India's central bank has raised interest rates three times since September, including at its most recent monetary policy review on Jan. 28. Source :  http://online.wsj.com/news/articles/SB10001424052702303546204579438450031951222?mg=reno64-wsj&url=http%3A%2F%2Fonline.wsj.com%2Farticle%2FSB10001424052702303546204579438450031951222.html