Indian inflation plummets as fuel prices drop

Data published Thursday revealed that annual wholesale price index inflation, the monetary-policy relevant measure, fell to 6.84% in the week to 6 December, down from 8% the previous week.

The dip - which was sharper than expected - came after the government lowered retail fuel prices on the back of the fall in global oil prices.

The Reserve Bank of India, which said back in April that it was targeting inflation of 4-4.5% for the current fiscal year, has already lowered its benchmark repo rate by 2.5 percentage points since the summer to 6%.

But the news of rapidly declining inflation potentially paves the way for further cuts if price growth decelerates further in the coming weeks.

The current situation is a far cry from that in the summer when the Reserve Bank faced the problem of double-digit inflation. Wholesale price index inflation stood at 11.05% in the year to 7 June, a 13-year high.