India Inflation Eases on Lower Food Prices

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The FINANCIAL — India said on May 12 that inflation eased and industrial production weakened in recent months, according to Nasdaq.

The country’s consumer inflation rate declined to 4.87% in April from 5.25% a month earlier thanks to a slower rise in food prices, government data showed. The reading was the lowest in five months and in-line with economists’ expectation of 4.90%.

However, industrial output grew at a slower-than-expected rate, underscoring concerns that a recovery in the economy is likely to be gradual at best. Industrial output grew 2.1% year-over-year in March, the weakest in five months and modestly below the 2.8% expansion predicted by economists. It had risen 4.9% in February.

Output of consumer durable products fell, reflecting the hesitation among consumers to spend. Consumer-durables output fell 4.7% from a year earlier in March.

On a brighter note, capital-goods output rose for the fifth month in a row, indicating businesses are scaling up production on hopes of stronger demand as the economy gathers momentum. Capital-goods output rose 7.6% year-over-year in March.

The improved investment sentiment together with easing inflation would help boost prospects for the economy that is expected to have grown 7.4% in the year ended March 31.

Consumer inflation, which is the main measure guiding policy makers in India, has slowed from a peak of over 11% in 2013, as government intervention in local markets to boost food supplies have helped keep their prices in check despite fears of a spike due to damage to crops caused by untimely rains. A sharp decline in oil prices has also helped keep inflation, particularly at the wholesale level, under control.

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The government is scheduled to report the wholesale inflation data Thursday. Economists expect wholesale prices to show a fall for the fifth successive month in April.


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