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Below the perspective on CPI Data Octoberby Mr. Nikhil Gupta, Chief Economist, MOFSL group.

Headline data suggest good news all around

Low inflation still not broad-based. CPI ex-vegetables up to 7.2% YoY in Dec'22

Headline inflation eased to 12-month low of 5.7% YoY in Dec'22, lower than 5.8% in Nov'22 and BMBG consensus of 5.9% (our forecast was 5.6%). Details are more relevant.

CPI ex-vegetables (94% weight) rose further to 7.2% last month.

Core inflation (ex food & energy) eased marginally to 6.4%

Services inflation eased to 5-month low of 5.2%

61.6% of the CPI basket, lowest in five months, posted 5%+ inflation last month

Overall, the fall was not broad-based, but ease in services is welcome.

Separately, IIP grew 7.1% YoY in Nov'22, much higher than the BMBG consensus of 2.8% and our forecast of 5%. This partly negates the unexpected fall of 4.2% YoY in Oct'22.

Due to better IIP, our EAI-GVA is revised up further to 8.7% YoY in Nov'22, following 5.2% in Oct'22. It certainly puts upside bias to 3QFY23 GDP growth.

We continue to expect 25bps rate hike by the RBI in Feb'23.

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