Nomura, the Japanese research firm has raised its forecasts for consumer price inflation (CPI) for 2022. It has also raised fiscal deficit and current account deficit for FY22 for India.
Due to higher energy costs, it expects these to have a cascading effect on supply chains, and hence consumption, amid economic recovery.
Firm has said in a note on 8th November, 2021, “we raised our 2022 CPI inflation forecast by 0.3 pp (percentage points) to 5.5%, FY22 fiscal deficit by 0.3 pp to 6.5% of GDP and current account deficit by 0.1 pp to 1.7% of GDP.”
Giving reasons for its revision in forecast, the firm said, “the government recently reduced fuel excise duties to lower inflation pressures, but the broad-based surge in higher energy costs will add to headline inflation, in addition to spilling over to higher transportation costs, food inflation and rising inflation expectations.”
Nomura, in may had revised its estimate regarding India’s GDP for the current 2021-22 fiscal from the earlier 12.6 percent to 10.8 percent.