WPI inflation likely to fall to 3.5% in September: Credit Suisse

The country's WPI inflation fell to 4.7 per cent in May,its lowest rate since October 2009.

Written by PTI | New Delhi | Published: June 23, 2013 11:43:13 am

Wholesale Price Index (WPI)-based inflation is likely to slide to as much as 3.5 per cent in September,says financial services firm Credit Suisse.

The country’s WPI inflation fell to 4.7 per cent in May,its lowest rate since October 2009.

According to its report,the lagged effects of weak manufacturing activity,softer money and lending growth and the fall in rupee denominated commodity price inflation are yet to be fully felt.

“With this in mind,we are looking for the WPI rate to fall below 4 per cent in August and bottom at around 3.5 per cent in September,” Credit Suisse said.

From September onwards,however,a combination of tough base effects and the impact of the rupee depreciation will lead to a rise in WPI (Wholesale Price Index).

In 2013/14,Credit Suisse expects inflation to average 4.8 per cent – which compares with a June consensus projection of 5.7 per cent.

“A good start to monsoon and a favourable forecast bodes well for a good harvest and a lower price rise. In our view,consumer price inflation will trend lower throughout the rest of the fiscal year ending in March 2014,” Credit Suisse said.

Though the consumer price inflation is currently hovering near the double digit levels (9.3 per cent in May),it is expected to fall to more acceptable levels in the coming

months on the back of a good rabi crop and favourable monsoon,the report said.

On interest rates,Credit Suisse said: “The central bank will deliver another couple of 25 bps repo rate cuts,” adding,it has pencilled in the July 30 meeting and the mid-September meet as the timing of the reductions.

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