WPI seen down 0.08% y/y

Mumbai: India's wholesale price index (WPI) is forecast to have trimmed its fall to nearly zero in the year to Aug. 29 from the previous week's annual decline of 0.21 percent, a Reuters poll of 11 economists showed on Wednesday.

It would be the 13th consecutive annual fall in the wholesale price index , but rather than deflation analysts see it more as a reflection of the much sharper rises during same period last year.

That effect will recede in coming weeks as the WPI peaked in the first half of September 2008, and the index has been rising on a weekly basis since early March.

Reserve Bank of India Governor Duvvuri Subbarao said on Monday inflation was becoming a concern sooner than expected, and the planning commission said last week inflation would exceed the central bank's comfort zone by the end of the fiscal year next March.

"Although growth concerns still remain, going forward, inflationary concerns will increasingly be the driver of the monetary policy," said D.K. Joshi, principal economist at CRISIL.

The WPI's food article sub-index rose 14.5 per cent in the year to August 22, and analysts said the rising food prices would soon see the annual change in the WPI turn positive.

The annual change in the WPI, the main measure of price pressures in India, fell below zero in early June for the first time since weekly data was released in the 1977/78 fiscal year.

The WPI data is expected around midday (0630 GMT) on Thursday.