BBC News

India's inflation rate falls sharply to 7.5%

image captionA drop in the rate of food price inflation helped to bring the overall figure down

India's inflation rate fell sharply in December to 7.5% from 9.1% in the previous month, partly due to an easing in the rate of food price rises.

This is the first time inflation has fallen below 9% in almost two years.

Despite the fall, analysts said the central bank was unlikely to cut interest rates, which currently stand at 8.5%, next week.

India's central bank has increased rates 13 times since March 2010 in an effort to hold down rising prices.

"The headline inflation has come down because of food inflation easing, but the manufacturing momentum is strong," said Sonal Varma at Nomura in Mumbai.

"From the [the central bank's] perspective, core inflation is still elevated, and so we are not expecting any rate move on 24 January," she said.

However, analysts do expect rates to come down in the coming months after Indian Finance Minister Pranab Mukherjee said recently that policymakers would start concentrating on improving economic growth rather than taming inflation.

More on this story

  • India holds lower inflation rate hopes for new year