In a significant development, the inflation measured by the Wholesale Price Index (WPI) plunged to zero in November; it stood at 1.77 per cent in October. The Wholesale inflation was at 7.52 per cent in November 2013.
The fall in the WPI weigh high on the retail inflation which significantly declining to a record low of 4.38 percent in November, current fiscal year.
Despite fall in the retail inflation, the apex bank – Reserve Bank of India did not allow any rate cut while reviewing its monetary policy recently as anticipated. RBI kept repo rate at unchanged at 8 per cent and cash reserve ratio at 4 per cent.
However, the bank has been speculating that the retail inflation could touch 8 per cent by March 2015 and 6 per cent by January 2016.
There would rates cuts by the Reserve Bank of India in the early next year, if the inflation continues to moderate by next couple of months.