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Below is perspective on CPI data for the month of January 22 By Mr. Nikhil Gupta, Chief Economist at Motilal Oswal Financial Services

As expected, Jan'22 headline CPI inflation at 6% YoY

It has likely peaked out and expected to soften to 5.7% in Feb'22

*  In line with our and market expectation, headline CPI inflation came in at 6% YoY in Jan'22, partly due to the base effect (4.1% in Jan'21). Food inflation was at 14-month high of 5.4% and the core inflation was stable at 6.2% in the month.

* Earlier today, Jan'22 WPI came in at 13% YoY, also in line with the consensus (12.8%).

* While the inflation has risen, as expected, Dec'21 IIP  came in lower than expected on Friday. We have been arguing that growth is a bigger concern than inflation in India.

* We expect 3QFY22 real GDP growth to disappoint. The market consensus is at 6% (revised down from 6.3% two months ago) and our estimates suggest the growth could be 5-5.5% only (scheduled on 28th Feb).

* Going forward, we believe that CPI- inflation has peaked and likely to soften to 5.6-5.7% in Feb-Mar'22.

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