Dec IIP likely to remain in the range of 2-3%: D&B

The December factory output is likely to remain in the positive territory and in the range of 2-3% but in the months to come it is expected to remain "subdued", global research firm Dun and Bradstreet says.

According to Dun & Bradstreet, the Index of Industrial Production (IIP), which had contracted by 0.1% in November due to poor showing by manufacturing and capital goods sector, is expected to remain in the positive territory during December 2012 primarily due to the base effect.

"IIP growth is expected to remain in the range of 2-3% during December 2012," the report said.

However, IIP is likely to display volatility in the coming period and is likely to remain subdued during the next five or six months as the industrial activity consolidates, the report added.

"The IIP growth is expected to remain subdued during the next five to six months as the industrial activity consolidates before recovering," Dun & Bradstreet India Senior Economist Arun Singh said.

Singh further added that "we hope that the measures taken by the government and the expected easing of policy rates by the RBI during the fourth quarter of FY13 will support in reviving the business sentiment and the industrial activity in the medium to long term."

On Inflation, the report said prices are likely to ease going ahead as demand continues to moderate and global crude oil prices stabilise. However, upside risks persists in case the government decides to raise the price of regulated fuels.

However, headline inflation is showing signs of moderation, and accordingly the RBI is likely to cut the repo rate in its third quarter policy review in end January 2013, it said.

D&B expects the WPI inflation to remain in the range of 6.8-7% during January 2013.

"While the easing of inflation on the back of moderation in the manufactured as well as the fuel group provides some solace, easing of the food price inflation is necessary for the moderation of the overall inflation on a sustainable basis. However, upside risks to inflation persists in case the government decides to raise the price of the regulated fuel," Singh added.

According to the report, "the rupee to remain at the current levels and average at around 54.50-54.70 per US dollar during January".