NEW DELHI: Inflationary pressures are likely to see an uptrend largely due to the deficit monsoon and weakening of rupee, while the Wholesale Price Index (WPI) is expected to be in the range of (-) 1.10% to (-) 0.90% in December, says a Dun and Bradstreet (D&B) report.
According to the report, the rain deficit poses upside risks to inflation as food prices remain elevated. Moreover, the increase in Minium Support Prices (MSP) in wheat and some of the winter-grown pulses is likely to put pressure on food prices while the weakening of the rupee is also likely to stoke inflation.
“Inflationary pressures that are subdued owing to low crude oil price and restrained demand will go up once these trends change course,” the D&B report said.
D&B expects WPI inflation to be in the range of (-) 1.10% to (-) 0.90% during December.
The wholesale inflation, although in the negative zone for the 13th consecutive month, moved up to (-) 1.99% in November as food articles, including pulses and onions, turned dearer. It stood at (-) 3.81% in October.
The report noted that the recovery in Indian economy is “still fragile”. Going forward, the deficit rainfall and subdued rural demand are threats to the recovery process, it said.
“Muted investments, a weakening rupee and slower-than-anticipated pace of reforms have tempered confidence of the business community in the recent period,” Dun & Bradstreet India Senior Economist Arun Singh said.
Singh added that while the government has taken certain measures to revive investment and ensure flow of funds to infrastructure projects, the government needs to proactively take the reform agenda forward.
“Progress of the winter session of Parliament is expected to influence business optimism and revive investor confidence in the short term,” he added.