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Below is Perspective on CPI numbers By Ms. Madhavi Arora, Lead Economist, Emkay Global Financial Services

“ Despite base effect, still-high fuel costs, input cost pressures and seasonal turn in some food prices in coming months etc. could even see inflation rise towards 6.2%+ later in the fiscal year. We revise our forecast by 25bps to 5.5% (RBI:5.3%) for FY22, as we reckon supply-side bottlenecks, higher imported commodity inflation and high pump prices would pose a countering upside pressure on inflation. The noises within the MPC may remain rise as pass through of impending input price pressures, the ensuing demand revival in contact-sensitive household services may keep core goods inflation under pressure. But with the monetary reaction function on net currently hinging more on growth revival becoming sustainable, RBI’s reaction function on key policy rates is unlikely to change in this year, especially as the pass-through to output prices and core inflation is still getting somewhat tempered, given the output slack. ’’

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