India’s food inflation slowed to a four-week low as the cost of onions and wheat declined.
An index measuring wholesale prices of agricultural products gained 10.63 percent in the week ended Nov. 5 from a year earlier, the commerce ministry said in a statement in New Delhi today. It climbed 11.81 percent the previous week.
Rising food costs have added to the challenge of curbing inflation in India, which has exceeded 9 percent each month this year. The Reserve Bank of India expects its 13 interest-rate increases since mid-March 2010 to slow price gains, and signaled last month it may be nearing the end of monetary tightening.
“The central bank expects inflation to fall in the coming months,” N.R. Bhanumurthy, a New Delhi-based economist at the National Institute of Public Finance and Policy, said before the report. “I don’t think they will increase interest rates in December.”
The rupee was little changed at 50.725 against the dollar at 11:53 a.m. in Mumbai. The yield on the 8.79 percent government security due November 2021 declined 8 basis points to 8.80 percent. The BSE India Sensitive Index fell 0.2 percent.
The government is taking steps to ease supply constraints and curb inflation, Finance Minister Pranab Mukherjee said yesterday. He predicted price increases will ease from December.
Indian inflation, measured by the benchmark wholesale-price index, accelerated to 9.73 percent in October, indicating price pressures are persisting. At the same time, the impact of Europe’s debt crisis poses risks to growth, complicating the task of steering policy in Asia’s third-largest economy. The RBI’s benchmark repurchase rate stands at 8.5 percent.
Onion costs declined 22.9 percent in the week ended Nov. 5 from a year earlier, today’s food inflation report showed. The price of wheat fell 3.6 percent.