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Inflation Data

Inflation: Falls to 3.92%
• India's wholesale price index (WPI) came down to 3.92% for the week ended February 07, 2009 from 4.39% for the week ended January 31, 2009, lowest in last 13 months.
• The index number of 'primary articles' and 'manufactured goods' declined week-on-week for the week ended February 07, 2009. However, 'Fuel segment' saw some moderate up move during the same period.
• 'Fuel segment' continues to witness deflation for last nine consecutive weeks. Similarly, manufacturing segment is largely on the downward trajectory for last three months, thus, reducing the inflation risk emanating from it.
• We expect headline Inflation (read WPI) to continue to fall at an accelerated pace before coming down to sub-2.0% levels by the end of FY09.
• The speedy fall in inflation is likely to provide additional headroom to RBI for further monetary accommodation. The deteriorating real economy is also strengthening the case for further cut in policy rates.