Inflation snapshot

India’s inflation held near a three decade low as the weakest economic growth in six years kept the cost of food and manufactured products under check. Wholesale prices rose 0.7% in the week ended 25 April from a year earlier after gaining 0.57% in the previous week, the government said in New Delhi. Economists expected a 0.63% gain. Wholesale prices could turn negative for a few weeks in the coming months, though that doesn’t mean the country is in the grip of deflation, the Reserve Bank of India (RBI) had said in April. RBI governor D. Subbarao may be near the end of his cycle of growth-supporting rate reductions as he expects inflation to climb to 4% over the next year. The central bank may take an extended pause on rates until the end of 2009. The bank has cut rates significantly since October to spur consumer demand. The monetary easing combined with tax cuts and government spending provide a stimulus of at least $85 billion (around Rs4.2 trillion), or 7% of the gross domestic product, according to RBI estimates. That may help economic growth recover to 6% in the year that started on 1 April, from 5.3% in the quarter ended 31 December, Subbarao had said on 21 April.