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The State Bank of India (SBI) expects the inflation in India to be about five per cent by March 23.

In a research report, the SBI also said the 7.01 per cent consumer price index (CPI) inflation announced by the Indian government on Tuesday for June 2022 confirms the fact that the peak point has passed.

According to the SBI report, CPI inflation attributable to supply side factors started moving up after September'21 while demand led CPI remained more or less constant.

"The two have been moving together post February'22 (since the starting of Russia-Ukraine conflict). However, in the recent months demand led CPI inflation has moved up a bit, while supply led CPI inflation continues to moderate," the SBI said.

Clearly, the RBI may have to raise rates further though, the clear downward trend in inflation attributable to supply side factors bodes quite well for inflation trajectory going forward, the report added.

The core inflation has trended down from its peak in April (taking last 12-months as reference period).

The moderation is on account of fall in contribution of transport and communication from 1.7 per cent in April to 1.1 per cent in June.

The fall in core CPI largely the product of fall in demand owing to lagged effect of high inflation in the past months.

Further correction in prices of precious metal around April has contributed to correction in personal care and effect.

With major states such as Maharashtra which contribute 100 bps to All India CPI (95 bps in June) expected to announce cut in VAT on fuel, it is expected that core may correct further as pass through of fuel will happen in subsequent months along with correction in global prices of commodities, the SBI said.

On the Index of Industrial Production (IIP) that showed about 20 per cent growth, the bad news is that in Q1FY23, new investment announcement declined by around 27 per cent to Rs 4.35 lakh crore as compared to Rs 5.99 lakh crore in Q1FY22 and Rs 5.75 lakh crore in Q4FY22, the SBI said.