India's inflation rate drops

17 January 2012: India's inflation rate fell sharply in December to 7.5 per cent from 9.1 per cent in the previous month, partly due to an easing in the rate of food price rises. This is the first time inflation has fallen below 9 per cent in almost two years.

Despite the fall, analysts said the central bank was unlikely to cut interest rates, which currently stand at 8.5 per cent, next week. India's central bank has increased rates 13 times since March 2010 in an effort to hold down rising prices. The headline inflation has come down because of food inflation easing, but the manufacturing momentum is strong. However, analysts do expect rates to come down in the coming months after Indian after the policymakers will start concentrating on improving economic growth rather than taming inflation.

Source: BBC News