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The State Bank of India (SBI) in a research report has expected the inflation in India to be about 5 per cent by March 23. It also said the 7.01 per cent consumer price index (CPI) inflation announced by the Indian government 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 2021 while demand led CPI remained more or less constant. The two have been moving together post February 2022 (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. 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 further said 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.