Indian inflation drops to 1-yr low, rate cuts seen
Indian inflation fell to its lowest in nearly a year in late January and analysts said last week’s fuel price cut would trigger a sharper drop, handing the central bank more room to lower rates and bolster growth.
Inflation had risen for two consecutive weeks, arresting its steep decline as a strike by truck drivers pushed up prices.
But analysts said this had been an aberration and some added India could be in for a period of deflation by May as Asia’s third-largest economy slows sharply from over 9 percent levels in the past few years.
“Given the current trend, inflation, could settle well below 2 percent by end-March,” said Shubhada Rao, chief economist at Yes Bank in Mumbai.