Indian inflation slows in April

NEW DELHI, May 15 (AFP): India's inflation slowed in April, thanks to an easing in food and fuel prices, government data showed Thursday, but analysts warned of fresh price pressures that underline challenges facing the next government.
The Wholesale Price Index (WPI), the closest watched cost-of-living monitor, slowed to a two-month low of 5.20 per cent year-on-year in April from 5.70 per cent in March, commerce ministry figures showed.
Food prices slowed to 8.64 per cent in April from 9.90 per cent the month before, while fuel and power prices eased to 8.90 per cent from 11.22 per cent the previous month.
The data comes on the eve of national election results that are expected to sweep the right-wing opposition Bharatiya Janata Party (BJP) and its candidate for prime minister Narendra Modi to power.
Modi, seen as more investor friendly than the ruling Congress party, has campaigned during the five-week election for reforms, investment and jobs to revive Asia's third largest economy.
But analysts said the next government faces numerous challenges to reduce inflation which has been a key election issue.
India faces possible poor monsoon season this year because of the threatening El Nino weather event, which could lower crop production and drive up prices again, they said.
"From the ... food inflation side, it is the El Nino that will be a big factor since it is almost certain that it will impact the monsoon this year," senior economist Arun Singh from Dun & Bradstreet said.
India is gripped by what many economists have described as "stagflation" -- high inflation and weak economic expansion.
For the past two years, India's economy has been growing at below five per cent -- almost half the rate notched up when the economy was booming.
The data comes after consumer inflation figures released this week hit a three-month high of 8.59 per cent in April, while industrial production shrank in March for the fifth time in sixth months.