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Below The Perspective on CPI data by Ms. Madhavi Arora, Emkay Global Financial

“The bulk of the increases is being seen in perishables, like vegetables, which, given the surge in tomato prices, has produced the highest sequential monthly print on record.  Non-perishables in the food basket are also seeing consistently higher prices, in particular cereals, pulses, and spices. Until early august there were no signs of any sequential moderation in food prices, However, the Govt intervention has picked pace in cereals and even helping in improving onion and tomato availability. The ongoing food price shock has put material risk to the RBI’s and our near term and FY24 CPI forecast. While this could pressure the RBI amid their inflation management mandate, this may not change the RBI's perspective on inflation on net. Their own research depicts that seasonal increases in episodes of high tomato prices tend to be short-lived – the average duration of a high price episode is ~2.6 fortnights and prices do not ratchet up across these seasonal spells. Overall, the cumulative food price spike will likely peter out by Q3FY24.”

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