Headline CPI at 25-month low in May 2023 Says Mr. Nikhil Gupta, Motilal Oswal Financial Services
Perspective on IIP & CPI Data by Mr. Nikhil Gupta, Chief Economist, MOFSL Group
Headline CPI at 25-month low in May'23
Headline CPI-inflation at just 4.3% YoY in May'23, in line with the BMBG consensus but slightly lower than our forecast (of 4.5%). Details suggest broad-based deceleration.
It was largely driven by food and imported items. Imported deflation was 4.2% YoY and food inflation was 18-month low of 2.9%
Core inflation was at 25-month low of 5.2% YoY
Core services inflation dropped to 35-month low of 4.2% YoY
Details of 299 components suggest that the share of 6%+ basket was down to 45% last month, the lowest in 11 months
CPI ex veggies was is at 37-month low of 5.1%
Overall, inflation data was good. We expect it to stay at ~4.5% for the next 3 months, before dipping towards 4% in Sep'23. It doesn't mean a rate cut is imminent but no more rate hikes in India.
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