Indian inflation likely to have accelerated in December – DBS Bank

Indian inflation and production figures are set to be released later this week. According to a DBS Bank research report, the consumer price inflation is expected to have accelerated to 5.7 percent year-on-year in December from November’s 4.9 percent, with upside risks. Higher food prices are expected to have driven the acceleration.

Global fuel prices continue to rise even if imported pressures were limited by stable domestic prices and a robust rupee. However, LPG prices rose in the month. Meanwhile, core inflation is expected to have remained strong at about 5 percent, lifted by lingering effect of the GST changes and higher housing index because of rent allowances rises.

Growth in industrial production is expected to have rebounded to 6 percent year-on-year from 2.2 percent the month before, as hinted by a solid pick-up in recent PMI prints, stabilization in manufacturing activity, and a better export performance.

“Trade data, due anytime in the week, might see the deficit remaining steady at around US$13.5bn, lifted by higher commodity imports”, added DBS Bank.

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