India's inflation to drop to 6.5pc this month
Thursday, 12 January 2012
NEW DELHI, Jan 11 (Business Standard): India's overall inflation rate, which has remained near the double-digit mark since December 2010, is likely to fall sharply to 6.5 per cent this month and stay "low" until 2013, says a report.
Contrary to many forecasters, global financial services major Credit Suisse envisages wholesale price index (WPI) inflation to drop to 6.5 per cent by January, below the estimate floated by the RBI, and is likely to remain there until the April-June quarter.
After the second quarter of this calender year, WPI is likely to "further fall to below 6 per cent to come through. Contrary to the view of many forecasters, we expect WPI inflation to remain below 6 per cent until 2013," the report by Credit Suisse said.
Even though food inflation has turned negative, overall inflation-which also factors in manufactured products, fuel and non-food primary items-has remained near double digits since December, 2010.
As per official data, food products witnessed 3.36 per cent deflation during the week ended December 24. The headline inflation numbers for December will be available next week. The rate of price rise stood at 9.11 per cent in November.
The RBI, which is scheduled to come out with its third quarterly monetary policy review on January 24, has already hiked interest rates 13 times since March, 2010, to tame inflation.
Credit Suisse, however, believes the central bank is likely to cut rates only in March.
"Coupled with a sustained period of sub-7 per cent growth, the RBI is likely to cut rates from March. We look for at least 125 bps of repo rate reductions in 2012/13," the report said.
The report noted that speculation on the impact the depreciating rupee will have on inflation is highly overdone, as commodity prices are falling.
Contrary to many forecasters, global financial services major Credit Suisse envisages wholesale price index (WPI) inflation to drop to 6.5 per cent by January, below the estimate floated by the RBI, and is likely to remain there until the April-June quarter.
After the second quarter of this calender year, WPI is likely to "further fall to below 6 per cent to come through. Contrary to the view of many forecasters, we expect WPI inflation to remain below 6 per cent until 2013," the report by Credit Suisse said.
Even though food inflation has turned negative, overall inflation-which also factors in manufactured products, fuel and non-food primary items-has remained near double digits since December, 2010.
As per official data, food products witnessed 3.36 per cent deflation during the week ended December 24. The headline inflation numbers for December will be available next week. The rate of price rise stood at 9.11 per cent in November.
The RBI, which is scheduled to come out with its third quarterly monetary policy review on January 24, has already hiked interest rates 13 times since March, 2010, to tame inflation.
Credit Suisse, however, believes the central bank is likely to cut rates only in March.
"Coupled with a sustained period of sub-7 per cent growth, the RBI is likely to cut rates from March. We look for at least 125 bps of repo rate reductions in 2012/13," the report said.
The report noted that speculation on the impact the depreciating rupee will have on inflation is highly overdone, as commodity prices are falling.