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India’s Nov WPI remains unchanged

December 15: India's wholesale price index showed no increase in November as oil prices tumbled, building a case for the Reserve Bank to start lowering interest rates early next year to help prop up economic growth.

The wholesale price index (WPI) was flat in November against a year earlier, its lowest since July 2009, government data showed on Monday.

Inflation dropped to zero mainly driven by a sharp decline in fuel prices, which fell an annual 4.91% last month.

Monday's data comes days after India reported consumer price inflation in November had dropped to 4.38%, well below the Reserve Bank of India's (RBI) 6% target for January 2016.

Indian businesses have been pleading for a cut in interest rates, which are among the highest in Asia, to stimulate consumption in a domestic demand-driven economy.

Consumer goods output has grown in just two of the last 22 months. It fell an annual 18.6% in October, leading to the sharpest contraction in industrial output in three years.

RBI Governor Raghuram Rajan held out prospects for a cut in the policy interest rate - set at 8.0% - early next year if inflation trends remained favourable and the government controlled its fiscal deficit.

Bolstering the rate cut prospect is a nearly 40% fall in global crude prices since July which has brought inflation down, lowered the import bill and reduced government spending on fuel subsidies.

Economic growth slowed to 5.3% in the July-September quarter from a high of 5.7% in the quarter ago, signalling it would be some time before the economy recaptures the 8% growth levels needed to create enough jobs for its expanding workforce.