Deflation in Wholesale Price Index to decline:India Ratings

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 says India Ratings and Research (Ind-Ra). Industrial production activity however is unlikely to show a pick-up in August believes Ind-Ra. As we move into the second half of FY16, there is considerable palpitation with respect to the health of the economy. It is still unclear whether the Indian economy is back on a sustainable growth path or if more pain persists in the system. A glance at the high frequency data indicates a mixed outcome.While the story relating to inflation so far has been encouraging - WPI which is wholesale prices have been witnessing deflation since November 2014 and CPI based retail inflation has been less than 4% in July and August 2015. CPI inflation currently is way below the Reserve Bank of India’s revised target of 5.8% by January 2016. A lot of the decline in prices has been due to the dramatic fall in global commodity prices including crude.Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.