India's Inflation Likely At 8% By March-End: Nomura

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India's annual inflation based on wholesale prices is likely to climb up to 8% by the end of March 2010, reported the media quoting a note from investment bank Nomura. It cited increasing input costs and strengthening economic activity for the likely rise in inflation.

The Reserve Bank of India had projected inflation to be around 5% by end-March. Nomura expects the apex bank to revise its target in its next policy review scheduled for October 27.

Sonal Varma, an economist at Nomura, said that India's economy is in the early stages of an inflation pick-up and with input cost pressures building along with recovering domestic demand, the output prices also will tend to rise. However, she added that inflation thus far had been driven by supply factors, although core inflation, or inflation outside of food and fuel, appears to have bottomed out.

Nomura revised its average inflation forecast for 2009/10 to 3% from 2% and for 2010/11 to 6.8% from 5.7%.

(Market News Provided by RTTNews)