Supply chain disruptions could derail inflation optimism: Dun & Bradstreet

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 Dun Bradstreet expects 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.

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: Dun & Bradstreet expects 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 Dun & Bradstreet expects the 15-91-day Treasury Bills yield to remain at around 6.95%.

External Sector: Dun & Bradstreet expects rupee to appreciate slightly in March 2024; Robust domestic growth along with low trade deficit and increase in forex reserves to support rupee. However, they 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 Variables 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 About Dun & Bradstreet: Dun & Bradstreet, a leading global provider of business decisioning data and analytics, enables companies around the world to improve their business performance. Dun & Bradstreet's Data Cloud fuels solutions and delivers insights that empower customers to accelerate revenue, lower cost, mitigate risk and transform their businesses. Since 1841, companies of every size have relied on Dun & Bradstreet to help them manage risk and reveal opportunity. For more information on Dun & Bradstreet, please visit www.dnb.com.

Dun & Bradstreet Information Services India Private Limited is headquartered in Mumbai and provides clients with data-driven products and technology-driven platforms to help them take faster and more accurate decisions across finance, risk, compliance, information technology and marketing. Working towards Government of India's vision of creating an Atmanirbhar Bharat (Self-Reliant India) by supporting the Make in India initiative, Dun & Bradstreet India has a special focus on helping entrepreneurs enhance their visibility, increase their credibility, expand access to global markets, and identify potential customers & suppliers, while managing risk and opportunity.

India is also the home to Dun & Bradstreet Technology & Corporate Services LLP, which is the Global Capabilities Center (GCC) of Dun & Bradstreet supporting global technology delivery using cutting-edge technology. Located at Hyderabad, the GCC has a highly skilled workforce of over 500 employees, and focuses on enhanced productivity, economies of scale, consistent delivery processes and lower operating expenses.

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