India WPI inflation falls to 5.1 per cent

India has seen wholesale price index (WPI) headline inflation fall to 5.1 per cent in January compared with 6.2 per cent in December and 7.3 per cent in November 2013.

The continued downward trend suggests the actions by the Reserve Bank of India and its governor Dr. Raghuram Rajan to tackle inflation by raising interest rates is starting to pay off.

On January 28 the country saw a further hike in interest rates by 0.25 per cent to 8 per cent as the bank stated that while WPI was at a four-month low, CPI remained close to double-digits.

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It added: “It is critical to address these risks to the inflation outlook resolutely in order to stabilise and anchor inflation expectations, even while recognising the economy is weak and substantial fiscal tightening is likely.”

In an effort to stop ad-hoc monetary policy reviews, the bank has initiated a two-monthly cycle, with the next policy review scheduled for April 1 2014.