VINACHEM

The benchmark wholesale-price index rose 9.73 percent inOctober from a year earlier, the commerce ministry said in astatement in New Delhi today. That compares with a 9.72 percentjump in September and the median forecast of 9.65 percent in aBloomberg News survey of 19 economists.

Asian nations from Indonesia to South Korea are eithercutting rates or keeping them on hold to protect expansion as Europe’s debt crisis threatens to trigger a global slump.India’s central bank last month signaled it’s nearing the end ofmonetary tightening, provided inflation slows, after it raisedrates for the 13th time since mid-March 2010.

“Prices are not coming off,” said Madan Sabnavis, chiefeconomist at Mumbai-based ratings company Credit Analysis &Research Ltd. “The RBI will have to probably revisit itsguidance if inflation remains elevated.”

The BSE India Sensitive Index gained 0.6 percent at 12:56p.m. in Mumbai. The yield on the 8.79 percent governmentsecurity due November 2021 rose four basis points, or 0.04percentage point, to 8.98 percent. The rupee was little changedat 50.09 per dollar.

The currency has tumbled more than 10 percent this year, adecline the central bank has said risks stoking inflation.

Fuel Costs

Indian Oil Corp., the nation’s biggest refiner, increasedlocal gasoline prices on Nov. 4 for the third time in six monthsto stem losses, saying the rupee’s decline boosted costs.

The Reserve Bank of India on Oct. 25 said that its monetarytightening will help curb inflation and that the likelihood of arate action in the December policy meeting is “relativelylow.”

India’s inflation will start to decline from December andease to 7 percent by March before moderating further in thefirst half of the next fiscal year starting April 1, accordingto the central bank. Beyond December, “if the inflationtrajectory conforms to projections, further rate hikes may notbe warranted,” the Reserve Bank said.

The central bank’s guidance on rates is “not acommitment” and is based on a “scenario materalizing and thereare many risks to that scenario materializing,” central bankDeputy Governor Subir Gokarn said on Nov. 11.

Growth Forecast

The Reserve Bank predicted India's economy will expand 7.6percent in the year ending March 31, lower than the 8 percent itestimated earlier.

Governor Duvvuri Subbarao has increased the central bank’srepurchase rate by 375 basis points since the start of 2010.That’s the fastest round of increases since the monetaryauthority was established in 1935, Bloomberg data show. Therepurchase rate is 8.5 percent.

The rate rises have started to hurt consumer demand.India’s industrial production grew 1.9 percent in September froma year earlier, the slowest pace in two years. India’sautomakers on Oct. 10 cut their car sales growth forecast for asecond time this year as companies including Honda Motor Co. andFord Motor Co. faced lower demand.

Subbarao said last month that the central bank gave theguidance on rates to help boost investment.