Recent fall in inflation does not mean decline is permanent: RBI Dy Governor HR Khan

Pouring cold water on hopes of rate cut in upcoming monetary policy, Reserve Bank of India (RBI)’s deputy governor, HR Khan  highlighted that recent decline in inflation did not mean the decline was permanent. He also emphasized that though decline in crude oil prices and other commodities were beneficial to Indian economy, but policy makers just could not jump their guns until they were convinced the trend was firmly established. Moreover, Khan also attributed to geo-political issues and tepid global recovery as reasons enough for RBI’s cautious approach and underscored that India’s Apex Bank just could-not be an outlier, particularly, in terms of inflation from among the BRIC countries. Further, the deputy governor also added that Inflation had long way to go and that structural issue like input costs, wage burden, food prices, protein-driven inflation, and rural areas were witnessing wider inflation pressures. In two encouraging developments which fuelled the hopes that lower interest rates cycle could begin in December, India’s Consumer Price Inflation (CPI) eased at an all time low level since the launch of the new series of Consumer Price Index in 2012, at 6.46% in September as compared to 7.80% in August, helped by the lower prices of food and fuel. Meanwhile, easing at 33-month low, India's main inflation gauge, based on monthly WPI had stood at 2.78% for the month of September as compared to 3.74% in the previous month and 7.05% during the corresponding month of the previous year. So far, Governor Raghuram Rajan has kept the benchmark repo rate at 8% after three increases since taking over in September 2013.