Perspective On CPI announcement By Prof. Krupesh Thakkar, ITM B-School
Below are Perspective On CPI announcement By Prof. Krupesh Thakkar, CFA, HoD - Financial Markets, ITM B-School
“India's CPI fell to 4.06% in January 2021 against 4.59% in December 2020 and 7.59% in January 2020. On a month-on-month (m-o-m) basis, it fell down by -0.6%. As expected, the fall is owing to further decline in food items (down by 2.7% m-o-m basis) led by vegetable prices(down by 16% on m-o-m basis). However, the rise in fuel prices (up by 1.6% m-o-m basis) has capped the decline in CPI. The core CPI (Ex-food and fuel) came at 5.7% the same as in December 2020. That might become a cause of concern. Now RBI, in its last bi-monthly MPC meet has estimated the CPI for Q4FY22 to be at 5.2%. Going by that the CPI might inch up for the last two months of current fiscal, partially owing to unfavourable base impact. On other hand, the Index of Industrial Production, IIP, came at 1.0% in Dec 2020 and up by 7.7% on a m-o-m basis; led by rise in all the segments – mining, manufacturing and electricity. So, a decline in inflation and rise in growth would be the ideal situation for a recovering economy. Even if the inflation goes north in coming months, with the expected rise in GDP, we should still be in a better situation.”
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