….and expected p to moderate from December’11 WPI Inflation trend (% YoY)
• Inflation expected to average 6% to 6.5% in 1HFY13 vs. 9% average in FY12 under the base case scenarios. Scenario 1: Assuming no upward revision of provisional numbers
• It may start moderating significantly only after December on high base, lagged impact of tightening, softening of commodity prices. • December WPI inflation may y move below 8% after almost two years. Moderating consumption demand will help keep inflation in check, but depreciating rupee might complicate things. things • WPI inflation may average around 8.8% in FY12 (FY11 Avg: 9.6%) with March end inflation clocking around 7% assuming stable food and commodity price. • RBI has also raised the FY12 Mar-end WPI expectation to 7% from 6%.
Scenario 2: Assuming Provisional numbers are revised up by small amount Source : CMIE, RMF Research
macro economic environment