“India’s inflation unexpectedly eased to an eight-month low in October, a slowdown that may be limited as the effects of a diesel-price increase spread through Asia’s third-largest economy.
The wholesale-price index rose 7.45 percent from a year earlier after climbing 7.81 percent in September, the Commerce Ministry said in a statement in New Delhi today. The median of 28 estimates in a Bloomberg News survey was 7.9 percent.
The Indian government boosted diesel tariffs by about 14 percent two months ago to curb fuel subsidies that have stoked a budget deficit. The central bank on Oct. 30 predicted faster inflation this quarter following the move, while signaling it may cut interest rates in the January-to-March quarter next year as price pressures subsequently moderate.
“The recent fuel subsidy cuts will stoke fuel inflation in the coming months, and have secondary effects on core inflation,” said Jyoti Narasimhan, India economist at IHS Global Insight in Bangalore. “With inflation unlikely to recede substantially, we no longer expect the Reserve Bank of India to soften its stance and cut policy rates” at the next review on Dec. 18, she said.”
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