Indian inflation rate falls in line with expectations

| December 14, 2010 | 0 Comments

Figures today revealed India’s wholesale price inflation rate fell last month to 7.48%, from 8.58% the previous month - in line with expectations of 7.50%, but still significantly above the central bank’s target of between 4% and 5%.

The figures suggest the Reserve Bank of India (RBI) will keep interest rates on hold when it meets later this week.

Inflation reached a two-year high earlier this year of 10.16%, after food and fuel prices surged.

This led the RBI to hike interest rates on six occasions this year to cub inflation in a thriving economy.

The RBI has previously said one of its main priorities is to bring down inflation and it is forecasting it to fall to 5.5% by the end of the financial year next March.

Annual food inflation has surged, causing major problems for the 450 million people who live below the poverty line in the country.

Last month, figures revealed the Indian economy grew by a staggering 8.9% on an annual basis in the July to September period – cementing its status as the world’s second fastest-growing major economy, behind China – which posted growth 9.6% year-on-year in the same period.

The rapid growth, fuelled by manufacturing, services and a strong farm sector, was better than the 8.2% expected by economists.

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