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Supply chain disruptions could derail inflation optimism: Dun & Bradstreet

Mumbai, March 31, 2024: The Economy Observer report presents Dun & Bradstreet's projections for critical economic indicators, accompanied by commentary and insights into the most recent economic trends. As a worldwide provider of business decisioning data and analytics, Dun & Bradstreet combines global data with local expertise to helps clients make smarter decisions.

Key economic forecast:

Real Economy: We expect growth in industrial activity to pick up from the month of February 2024 supported by strong growth in exports, benign raw material prices and to an extent by election related spending. Value of exports in February rose to 11-month high and grew strongly by 12% compared to last year. Dun & Bradstreet expects the IIP to have grown by 5.0% in February 2024.

Price Scenario: Retail inflation is expected to remain above 5% in March 2024 as food inflation remains high and sticky, especially, for vegetables and pulses. Moreover, the inflation rate in protein food items have also skyrocketed and is likely to remain high in the festive month of March 2024. Dun & Bradstreet expects the Consumer Price Inflation (CPI) to be 5.15% and Wholesale Price Inflation (WPI) to be around 0.1% for March 2024.

Money & Finance: High inflows in the debt market to keep yields in the long- term bonds in line with February.  However, short-term yields are anticipated to stay range-bound in March 2024 compared to February due to year-end tax payments. Additionally, liquidity tends to tighten in March as banks typically record higher deposits on their books before the year-end. Dun & Bradstreet anticipates the 10-year G-Sec yield to be around 7.1% in March 2024, while we expect the 15-91-day Treasury Bills yield to remain at around 6.95%.

External Sector:  We expect rupee to appreciate slightly in March 2024; Robust domestic growth along with low trade deficit and increase in forex reserves to support rupee. However, we expect rupee to depreciate in April, although slightly, as factors such as strengthening of dollar and disruptions in supply chain across major trade routes to continue to impact trade flows and investor sentiment. Dun & Bradstreet expects the rupee to appreciate to 82.8 per US$ in March 2024 and depreciate to 83.0 per US$ in April 2024.

Dr Arun Singh, Global Chief Economist, Dun & Bradstreet said, “The decrease in raw material prices has fostered optimism regarding inflation, despite the gradual increase in prices of finished goods over recent months, thereby supporting manufacturers' profit margins. However, this optimism concerning input price inflation may swiftly diminish due to dwindling inventories caused by ongoing supply chain disruptions. Shipments are experiencing prolonged durations and increased costs due to the rerouting of trade bound for the Red Sea. If these disruptions persist, they could impede further alleviation of inflationary pressures, thereby delaying decisions regarding rate cuts”.

Dun & Bradstreet’s Economy Observer Forecast



Latest Period

Previous period

IIP Growth

5.0% February-24

3.8% January-24

4.2% December-23

WPI Inflation

0.1% March-24

0.2% February-24

0.27% January-24

CPI (Combined) Inflation

5.15% March-24

5.09% February-24

5.1% January-24

Exchange Rate (INR/US$)

83.00 April-24

82.8 March-24

82.96 February-24

15-91 day's T-Bills

6.95% March-24

7.03% February-24

6.97% January-24

10-year G-Sec yield

7.1% March-24

7.09% February-24

7.20% January-24

Bank Credit

20.0% March-24

20.5% February-24

20.3% January-24




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