Deficient Monsoon May 'Cast a Cloud' on Inflation Outlook: Dun & Bradstreet

Inflation numbers have showed some improvement in the month of June and but deficient monsoon may "cast a cloud" on the price front going forward, says a Dun & Bradstreet report.

According to D&B, the WPI inflation and CPI inflation is likely to remain in the range of 5.2 per cent-5.4 per cent and 7.4 per cent-7.6 per cent, respectively for this month.

Monsoon rains are very crucial for the agriculture-driven Indian economy, as nearly 60 per cent of agricultural area is still rain-fed and rains have implications for both inflation and growth.

"Even as the overall price situation showed some improvement, deficient monsoon may cast a cloud on WPI inflation outlook," Dun & Bradstreet India's senior economist Arun Singh said.

Mr Singh further added that the "proactive measures taken by the government to mitigate the impact of deficient monsoon on inflation would play a crucial role going forward."

After rising to a five-month high in May, inflation dipped to 5.43 per cent in June, while retail inflation fell to a 30-month low of 7.31 per cent last month.

The headline WPI inflation and CPI inflation is expected to remain range-bound during July 2014 amid late revival in monsoon and easing of primary article inflation, the report said.

"The recent weakness in the currency and expected deficient in monsoon pose upside risks to inflation," D&B added.

On the Union Budget, the report said that even though devoid of big-bang announcements, there has been a focus on almost every key sector of the economy accompanied by a host of new ideas and initiatives.

"Through its focus on infrastructure, entrepreneurship and a host of facilitation measures to ease investment climate, the Government has given a clear direction of how it intends to reboot the economy going forward," Mr Singh added.