A steep fall in global crude oil prices and lower vegetable prices saw wholesale price index-based inflation reach the ‘zero’ level in November, putting more pressure on the Reserve Bank of India to cut policy rates.
The WPI footprint in November is much lower than the 1.77 per cent in October and 7.52 per cent in November last year.
With prices of pulses remaining high and the possibility of prices rising over the next few months — since Rabi coverage is lower — the central bank may not immediately budge with a rate cut, say economists.
The RBI had recently noted that although November inflation is expected to ease, the favourable base effect that is driving down headline inflation could dissipate and inflation for December may rise above current levels.