India inflation edges higher to 7.2%

As core inflation slipped to 4.2%.

According to BBVA, India’s December wholesale price inflation steadied at 7.2% y/y (BBVA: 7.2%; consensus: 7.4%), the same level as the previous month.

As a continued moderation in core and fuel prices offset a low base effect and higher food inflation. Core inflation (non-food manufacturing) slipped for the fourth successive month to 4.2% y/y, signalling easing demand pressures and softer commodity prices.

"Looking ahead, we expect WPI inflation to average 6.6% y/y in 2013 with near term upside risks emanating from a weak rupee and imminent hikes in energy prices. Easing WPI inflation should enable the RBI to cut its repo rate by 25bps at its next policy meeting on January 29th policy meeting to 7.75%, the first cut since May 2012," BBVA said.