Inflation may go up to 8.2%: Morgan
- Sports court tears Narsingh Yadav defence, NADA’s credibility
- Ramya on sedition case: Will not apologise for my Pakistan remark, said nothing wrong
- I can't fight against the government or AFI, but I know the truth: OP Jaisha
- From Rajasthan to Bihar: Tracking floods in north India
- Kashmir unrest: Curfew lifted from parts of Srinagar
Notwithstanding the slight decline in WPI inflation in October, inflationary pressures are likely to continue in the months ahead and may touch 8.2 per cent by the year end, says a report.
According to a research note by Morgan Stanley, WPI inflation is likely to accelerate to around 8-8.2 per cent by December 2012 before moderating to the 7-7.5 per cent level by the quarter ended March 2013.
Though the provisional WPI inflation for October has decelerated to 7.45 per cent, but going by the trend of revision in the past months, the final number could be closer
to 8 per cent, Morgan Stanley said.
The WPI Inflation declined marginally to 7.45 per cent in October, from 7.81 per cent in September.
WPI inflation has remained above the RBI's comfort zone of 5-5.5 per cent for the past 35 months now.
Moreover, the moderation in the price rise comes amid a string of bad data including the contraction in industrial output, and decline in exports along with rise in retail
inflation, dampening hopes of an early economic revival.
"Given the central bank's guidance for monetary policy stance in its last monetary policy review on October 30, we believe that policy rates will remain on hold until the end of 2012, with easing to start in Q1-2013," the research note said.
Though inflation rates are likely to show some moderation in the fourth quarter of this fiscal year, but it is still expected to be way ahead of the Reserve Bank's comfort zone and thus the RBI would have limited room for policy easing.
"We believe that even as inflation starts to ease from Q1-2013, it may remain above the RBI's comfort zone for longer. Hence, we expect policy easing to be limited to about 50-75bps in 2013," Morgan Stanley said.
- Cow protection, paradoxically, poses a threat to the BJP’s project of Hindu unity
- The government needs to distinguish between crooked NGOs and genuine ones
- India’s quest for Olympic medals is hampered by history and geography
- The Modi government is meeting its development targets before time
- Raja Mandala: The Great Wall of China
- Farm incomes may not revive despite good monsoon