The recent spell of unseasonal rains could trigger inflation in the coming months, according to experts.
The consumer price inflation or CPI could rise close to 6 percent in the next three months, DNA said, citing a Nomura report.
The good news is that it is likely to be temporary in nature, according to the financial services firm.
"We estimate that unseasonal rains could push CPI inflation close to 6 per cent in second quarter of 2015 (April-June period), versus our current estimate of 5.2 per cent, indicating a transitory shock of 80 bps on CPI inflation," Nomura India Chief Economist Sonal Varma said in a note.
Retail inflation edged up to 5.37 percent in February against 5.19 percent in January, on the back of increase in prices of food items, including vegetables and beverages.
"Inflation has bounced off November's low of 3.3 per cent year-on-year to 5.4 per cent in February 2015, but still below January 16 target (of below 6 per cent). The recent bout of unseasonal weather developments and hurt to selected winter crops might stoke worries over food inflation," said Radhika Rao, Economist, DBS Bank, to Business Line.
Nomura said that the projected rise in inflation is transitory and should not be a source of concern for the Reserve Bank of India (RBI).
Further, the Japanese brokerage firm says that pattern of unseasonal rains in the past four years indicates that are upside risks to food inflation, and therefore CPI inflation, in the next three months.
India has witnessed disinflationary trend over the past few months, with CPI inflation falling from a peak of 8.6 percent in January 2014 to 3.3 percent in November. Fall in inflation rates last year was largely driven by a plunge in crude oil prices in the global markets caused by oversupply.
However, analysts at Barclays Capital assume a normal monsoon in 2015, which should help to keep food prices broadly stable.
"We expect inflation to average around 4.5% in 1H FY15-16, and rise to around 5.5% in 2H FY15-16,"said Barclays Capital in a recent note.