Inflation risks for 2021 remain skewed to the upside, especially core readings, on higher commodities’ prices, said DBS Group in a research report.
Accordingly, the report cited higher commodities’ prices, rigidity in fuel taxes and idiosyncratic factors apart from a likely return in demand impulses as growth gains traction.
“A normal monsoon and strong domestic production are expected to cool non-imported food pressures beyond the seasonal swings.”
Both WPI and CPI inflation indices have quickened in recent months, but the wholesale price index has outpaced retail inflation as the former is more correlated to global commodities.