The Hindu Business Line : Wholesale price index seen at 2.9-3.1% in Nov

The WPI (wholesale price index) inflation rate is expected to average around 2.9-3.1 per cent in November, according to the Dun & Bradstreet’s latest economy forecast. Inflation rate during October was 3.03 per cent while in September it was 3.3 per cent.

“The Reserve Bank of India has re-iterated its medium term objective of inflation at around three per cent in the mid-term review of its annual monetary policy.

Global crude prices

However, a sharp surge in global crude oil prices to $95-100 per barrel range, does pose a risk to the inflation scenario,” the report stated.

Although, inflation as measured by the WPI appears to have been contained, the complete pass-through of international oil prices has not yet been realised.

While the Government has issued oil bonds to state run oil refineries to compensate their losses, it has resulted in further pressure on the fiscal front bringing the sustainability of issuing oil bonds in question.

Money supply

On the money supply front, the RBI is expected to moderate foreign capital inflows and further liberalise capital outflow norms in the coming months.

The 15-91 days T-bills yields are expected to be in the range of 7-7.2 per cent in November, the report suggested.

“Given the current domestic economic scenario and a further reduction in the Fed rate by 25 basis points to 4.5 per cent, robust capital inflows can be expected; placing and upward pressure on the rupee.

However, the RBI’s intervention in the forex market and a sharp rise in global crude oil prices could put a cap on the rupee’s gains.

The rupee is expected to appreciate and be in the range of 39.25-39.45 during November,” the report said.

Related Stories:
Inflation rate rises on costlier fuel, manufactured items
Inflation rate rises on costlier fuel, manufactured items
Inflation rate drops on cheaper pulses, edible oil