Inflation Likely To Rise In December

According to a report by Dun & Bradstreet (D&B) inflation, which has been decreasing for the last few weeks, may go up this month. The global research company has said that in spite of the fact that wholesale price index (WPI) inflation was almost zero in November, it is likely to go up in December.

"D&B expects the headline WPI inflation to increase by 1.0-1.5 per cent during December 2014," the report said. "A 50 basis point cut in repo rate a few months later will send a stronger signal to the market than a 25 basis point cut during or before the policy meet due in February 2014," said Arun Singh, D&B India’s senior economist.

According to official data, WPI inflation was almost zero in November and the index for industrial production (IIP) numbers decreased by 4.2% in October. These data may force the Reserve Bank of India (RBI) to cut rates, which have remained static since January this year.

"Measures such as to allow banks to flexibly structure the existing project loans to infrastructure and core industries projects and governments' initiatives for ease of doing business would boost investment and industrial activity in the country rather than a mere cut in repo rate," said Singh.

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