New Delhi : As the base effect wanes, CPI inflation will go up and WPI deflation will come down from the current levels in September, India Ratings said.
“A reversal in the base effect will lead to lower deflation in the wholesale price index (WPI) and a rise in the consumer price index (CPI) in September,” the rating agency said.
Industrial production activity, however, is unlikely to show a pick-up in August, it added. Wholesale Price Inflation (WPI) has been declining since November, 2014 and CPI based retail inflation has been less than 4 per cent in July and August, 2015.
CPI inflation currently is way below the Reserve Bank of India’s revised target of 5.8 per cent by January, 2016. The decline in prices has been due to the dramatic fall in global commodity prices, including crude.
The rating agency, however, noted that the story relating to industrial activity continues to remain far from encouraging.
“The index of industrial production (IIP) growth, though positive now for several months, is still hovering below 5 per cent since the beginning of the year. “The situation relating to trade is even more pessimistic, with exports falling on an average close to 15 per cent this year,” India Ratings said.
