CPI edges lower for 2nd month in a row Says Vivek Goel, Tailwind Financial Services
Below is View on CPI Data by Vivek Goel, Co-founder and Joint Managing Director, Tailwind Financial Service Pvt Ltd
Consumer Price Index (CPI) clocked 5.72% down from 5.88% in November. This would provide some relief as persistent inflation has been the concern driving monetary policy since the past year. However, while there is some much-needed relief in headline CPI, it is important to note that this is on the back of moderation in food inflation even as core inflation remained sticky at 6.3%.
In addition to inflation data, IIP data also brought some cheers as it rose sharply for November at 7.1% compared to -4.3% in October. While this was partly due to low base effect from previous year, the rebound was higher than market expectations.
With positive headline inflation along with US inflation also easing to 6.5%, RBI might start to consider softening monetary policy stance while remaining cautious given sticky core inflation and risk of commodity price rise as China reopens.
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