New Delhi: India’s retail inflation slowed to a 19-month-low of 2.19% in December 2018 compared to 2.33% a month ago, as food prices continued to slide. Data released earlier in the day by the Department of Industrial Policy and Promotion (DIPP) showed that India’s wholesale price inflation decelerated to an eight month low at 3.8% in December from 4.64% a month ago, on the back of softening inflation for fuel as well as manufactured items.
Slower-than-expected economic growth projection and a benign inflation scenario may force RBI under its new governor Shaktikanta Das to change its stance and cut rates to support growth.
RBI governor Shaktikanta Das, who took charge last month, said at his first press conference that inflation remained within RBI’s target and its outlook was benign. “But we need to be watchful,” he said, ahead of the next policy meeting in February.
Principal economic adviser in the finance ministry Sanjeev Sanyal in an interview last month said RBI needs to structurally reduce interest rates as the government has anchored inflation to a lower level.
With oil prices falling more than 30% from recent highs, an impending global slowdown, and higher oil production in the US, analysts expect the upside to oil price rises to have been capped.