WHAT: India's October wholesale price index WHEN: Monday, Nov. 15, around noon (0630 GMT) For full poll data click on REUTERS FORECAST: India's wholesale price index in October probably rose 8.44 percent from a year earlier, a touch slower than its 8.62 percent increase in September.
Forecasts from 26 economists ranged from 8.00 percent to 8.74 percent. FACTORS TO WATCH: Food inflation saw its fourth consecutive week of easing, providing some relief to policymakers as they battle stubbornly high inflation. The food price index in the year to Oct. 30 rose 12.30 percent, compared to 12.85 percent in the previous week, while fuel inflation stood at 10.67 percent, steady from previous week. Food makes up a little over 14 percent of the wholesale price index, while fuel contributes about 15 percent, and a quickening or softening in these components will put pressure on the headline figure in either direction. The Reserve Bank of India (RBI) raised interest rates last week for the sixth time this year and said it would remain vigilant about inflation, which is still well above its comfort level. However, the central bank indicated that there was little chance of another rate move in the next three months. The RBI lifted the repo rate, at which it lends to banks, to 6.25 percent and raised the reverse repo rate , at which it absorbs excess cash, to 5.25 percent. The central bank next reviews monetary policy on Dec. 16. Analysts polled by Reuters expect the RBI to raise rates by a total of 25 basis points by the end of the fiscal year in March. Expectations for more policy tightening also waned after the September industrial output came in lower than expected. India's annual industrial output growth slowed unexpectedly in September, led by a decline in capital goods production, adding to the likelihood the central bank rate will keep rates on hold in coming months. The annual industrial output grew 4.4 percent, well below the median forecast of 7.0 percent in a Reuters poll and lagging the previous month's upwardly revised 6.92 percent growth. MARKET IMPACT Traders say the market has priced in inflation at about 8.4-8.5 percent, but if the reading is higher than that, it could push up bond yields by 5-6 basis points. Overnight Indexed Swaps (OIS) could also rise by that much across the curve, but the longer end of the curve could rise more if inflation worries resurface. If inflation data meets estimates or falls below 8.4 percent, bond yields and OIS could ease, as concerns about more policy tightening could wane. (Reporting by Anooja Debnath and Neha D'sila; polling by Bangalore polling unit; editing by Malini Menon) ((firstname.lastname@example.org; Tel: +91 22 6636 9033; Reuters Messaging: email@example.com)) Keywords: INDIA ECONOMY/WPI (If you have a query or comment on this story, send an email to firstname.lastname@example.org) COPYRIGHT Copyright Thomson Reuters 2010. All rights reserved.
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