November WPI inflation at 9.11%

Mumbai, December 14, 2011 : The wholesale price index (WPI) for the month of November rose 9.11% from a year earlier, slowing from a 9.73% rise in October. Inflation internals reveals that food inflation stood at 8.54% in November from more than 11% in October, while fuel inflation increased to 15.48% from 14.79% and manufacturing inflation increased marginally, to 7.7% from 7.66%. Main improvement is because of food.

Taking cues from this, bond yields edged up after the higher-than-expected inflation figure. The 10-year yield rose 4 basis points to 8.46%, while stocks were down 0.4%. In an attempt to curb inflation  central bank has raised interest rates 13 times since March 2010. Industrial Data published on monday showed negative growth of -5% highlighting slowing economy and tight liquidity situation.

It is yet to be seen that what RBI does in its meeting to be held on December 16, 2011. Though a section of market believe a rate cut will note be possible up to March 2012, Central bank may lower CRR requirement to deal with liquidity situation.