A Crisil report has said that CPI inflation is likely to average higher at 5 per cent in the current fiscal on expectations of increasing pressure on food prices as well as uptick in global oil and commodity rates.
As per reports, Consumer price index (CPI)-based inflation averaged 4.6 per cent in the first 11 months of 2016-17 and could be about 4.7 per cent for the entire fiscal ended March 31, 2017.
Commenting on the issue, a Crisil Official told the media, "Inducements to inflation are indeed many in the road ahead. To wit, pent-up demand after demonetization, lower bank lending rates, the second tranche of payments based on the Seventh Pay Commission recommendations, and an uptick in global oil, metals and agri-commodity prices after about 3 benign years."
"Not surprisingly, the sharper-than-expected fall in inflation over the past few months has already started correcting as remonetisation gained currency," he added.
The rating agency further said that food price pressures could build up anew if El Nino disrupts the south-west monsoon this year, while core inflation, which has been sticky, could also edge up if domestic demand improves.