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Below Perspective on IIP and CPI numbers By Ms. Madhavi Arora, Lead Economist, Emkay Global Financial Services

“The easing of headline and core inflation in near-expected lines, while positive, is still implying inflation average has overshot RBI's 4Q estimate.

 However there has been a clear departure from the RBI's past guidance which was more anchored to domestic underlying inflation dynamics (which they in so far found unsettling) than the consistent policy repricing that the West was seeing. Even as their assessment of domestic inflation has changed little, their current policy focus has unambiguously moved to the global dynamics. The fear that “speed can kill” has led to a dovish turn in DM Central banks and RBI is also having a rub-off of the same. The pause is here to stay for at least 2-3 quarters before we get a pivot in the form of a cut.

 That said, the inflation trends ahead should ease  and we see headline Inflation averaging 5.3% in FY24 and core undershooting headline to average around 5.1%. Factors like better rabi output and easing cost conditions would be countered by weather related vagaries, milkflation, higher global financial market volatility and ongoing pass through of input prices to output prices, impacting core services inflation”.

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