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WPI inflation likely to be over 7.5 pc by end-FY 10: D&B

Last Updated: Tuesday, December 15, 2009 - 23:41

Mumbai: "Wholesale Price Index (WPI) inflation will average between 6.40-6.60 per cent during December 09," Dun & Bradstreet`s economy forecast said here on Tuesday.
The sharp rise in WPI inflation driven by the relentless increase in prices of primary food articles is likely to be a key concern in the near future, it said.

With the revival in the global economic activity, the demand for crude oil is likely to witness an increase in 2010, leading to a rise in international oil prices, Dun & Bradstreet said.

GDP is expected to grow at a lower rate of 6.5 percent in the current quarter of this fiscal against 7.9 percent in Q2 on account of weak performance of the agriculture sector.

While the agriculture sector is expected to grow at sub-zero level in Q3 FY 10, industry and services sectors are expected to drive economic activity, it said.

D&B expects index of industrial production (IIP) to have grown by 8-9 percent during November.

D&B has forecast that the inflation would be more than 7.5 percent by end-March FY 10 against the initial estimate of 6 per cent. WPI inflation is likely to average between 6.40 -6.60 percent during December 09, it said.

While advance tax payments by the corporate sector in mid-December 09 is expected to result in some cash outflow, redemptions and interest payouts from G-sec and state development loans as well as Government borrowing holiday for almost three weeks will again inject liquidity in the system, it said.

D&B expects 15-91 day T-Bill yield to average at around 3.3-3.5 percent and ten-year G-Sec yield to average at around 7.7-7.9 percent during December 09.

The rupee is expected to remain around current levels in the short-run and it might experience some appreciation from current levels in the long-run on expectations of sustained capital inflows.

The rupee would remain at around 46.30-46.50 per US dollar during December 09, D&B said.

Bureau Report

First Published: Tuesday, December 15, 2009 - 23:41

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