Comments on CPI data: The inflation for May 2023 cooled off to a 2 year low of 4.25% Says Anand Varadarajan , Asit C Mehta Investment Interrmediats
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Below Comments on CPI data By Anand Varadarajan, Director, Asit C Mehta Investment Interrmediats
“The inflation for May 2023 cooled off to a 2 year low of 4.25%, below RBIs upper target range of 6%. This was down from 4.7% in April 2023 and 5.6% in Mar 2023. Rural inflation stood at 4.17% while urban inflation stood at 4.27% for the month.
Food inflation eased to 2.91%, down from 3.8% in April 2023. During the month, the inflation rate for vegetables witnessed a contraction of 8.1% while the inflation rate for cereals came in at 12.65%.
We expect the RBI to continue its “pause” stand with respect to repo rates and would wait to confirm for a longer consistency of low inflation for a few more months before opting for rate cuts. By then, the monsoon would also give better visibility of food inflation going forward.
There could be some upside risks to inflation from any El Nino disturbances, the higher MSP price increases and the late arrival of monsoons. The RBI is expected to remain on hold in 2023 with rate cuts starting not before 2024”
Above views are of the author and not of the website kindly read disclaimer
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