Perspective on IIP Data for May 2022 And CPI data for June 2022 By Mr. Nikhil Gupta, Motilal Oswal Financial Services Ltd
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Perspective on IIP Data for May 2022 & CPI data for June 2022 by Mr. Nikhil Gupta, Chief Economist, Motilal Oswal Financial Services Ltd
India's Jun'22 inflation came in at 7% YoY, similar to that in May'22 and slightly lower than the consensus (our forecast of 7.3%). Lower inflation was primarily because of lower than expected food inflation (7.8% v/s our forecast of 8.8%).
The core inflation was also down to 6.2% last month, slightly higher than our expectation of 6.1%.
Separately, IIP grew 19.6% YoY in May'22, slower than Bloomberg consensus of 20.7% (and our forecast of 24.9%). The base effect suggests a lot of noise in the data.
Overall, there were no surprises in today's data. Thus, no major implications for August monetary policy. We expect 25bp hike next month. Lower than expected inflation for the second consecutive month, however, is a relief.
Going forward, we expect headline inflation to stay ~7% in 2QFY23 and ease towards 6.5% in 4Q (<6% in Mar'23). In contrast, IIP could grow in double-digit in Jun'22, before easing sharply in 2Q.
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