India is "definitely not out of the woods" as far as price pressures are concerned despite the slower pace of inflation seen in November, says ING Vysya Bank economist Upasna Bharadwaj. WPI inflation in November is up 7.24% from a year earlier, lower than the 7.60% estimated in a Dow Jones Newswires poll. But, the government also revises up the September inflation rate to 8.07% from a year earlier vs 7.81% provisional. There is a good chance the inflation data for October and November may be revised upward too. "We are stuck in a low growth-high inflation scenario, with the Reserve Bank of India finding itself restricted in action," Bharadwaj says. Still, the RBI may cut its key lending rate by 50 basis points to 7.5% between January and March as it indicated at its Oct. 30 policy. Bharadwaj says food prices remain a major cause of worry and can spill over further into general inflation and that is something the government needs to guard against by improving supply and distribution.
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