Indian headline inflation likely to have accelerated slightly in March

India’s inflation data for the month of March is set to release tomorrow. According to a DBS Bank research report, the headline inflation is expected to have validate the central bank’s move to be confident on a benign inflationary trend but prefer to stay data-dependent as inflation is likely to grind higher after reaching bottom in January 2019.

“We expect March’s reading to tick up to 2.8 percent YoY from 2.6 percent month prior, leaving the quarter’s average inflation at 2.4 percent”, said DBS Bank.

Waning disinflation in food and bounce in fuel prices might have added to the headline, while services inflation might have remained stable, keeping core reading at 5 percent. Industrial production in February is also expected to have been stable, but soft, at 2 percent year-on-year from 1.7 percent in January.

“Key sub-categories have eased, particularly, capital goods and consumer durables which were faring well last year. Once election related uncertainty fades, financial conditions ease and budgetary stimulus kicks in, production trends can return to 3-4 percent growth, not far from FY18 and FY19 annual growth pace”, added DBS Bank.