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India's wholesale inflation remained unchanged in January year-on-year, holding at 2.31%, according to government data released on Thursday.
The figure was slightly below the 2.5% economists had forecasted and down from the 2.37% recorded in December. According to Reuters, this steadiness is attributed to a moderation in food and fuel prices.
The wholesale inflation rate, which serves as a gauge for producer prices, saw food prices increase by 7.47% in January compared to an 8.89% rise in December. Notably, vegetable prices saw a significant deceleration, with an 8.35% year-on-year increase, a sharp decline from the 28.65% surge in the previous month. Meanwhile, cereal prices experienced a 7.33% rise in January, which was a slight increase from 6.82% in December.
Manufactured products, which constitute around 64% of the wholesale price index, witnessed a price increase of 2.51%, up from the 2.14% rise seen in the preceding month. On the other hand, fuel and power prices fell by 2.78% year-on-year, compared to a 3.79% decrease in December.
The moderation in wholesale inflation comes alongside a slowdown in India's headline retail inflation, which hit a five-month low in January as food price inflation eased. This has fueled expectations of further interest rate cuts to stimulate the South Asian economy. Last week, the Reserve Bank of India (NSE:BOI) reduced its key interest rate for the first time in nearly five years, in response to inflation moving closer to its 4% target.
The central bank has projected inflation to average 4.8% for the current financial year, with an anticipated reduction to 4.2% in the next. It highlighted the expectation for food inflation pressures to diminish, although volatile global energy prices remain a risk to the inflation trajectory.
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