Perspective on CPI data for the month of November By Mr. Nikhil Gupta, Motilal Oswal
Follow us Now on Telegram ! Get daily 10 - 12 important updates on Business, Finance and Investment. Join our Telegram Channel
https://t.me/InvestmentGuruIndiacom
Download Telegram App before Joining the Channel
Below is perspective on CPI data for the month of November By Mr. Nikhil Gupta, Chief Economist at Motilal Oswal Financial Services
Nov'21 headline CPI inflation was 4.9%, much lower than expectations
Feb'22 reverse repo rate hike is on the cards
* Headline CPI came in at 3-month high of 4.9% YoY in Nov'21, much lower than our expectation of 5.3% and the Bloomberg consensus of 5.1%. It means CPI-inflation averaged 5.2% in Apr-Nov'21, following 6.9% inflation in Apr-Nov'20.
* Lower than expected inflation was entirely because of 'vegetables' and thus, food inflation. As against our expectation of 2.9% food inflation, it came in at 1.9%, pulling the headline inflation.
* Core inflation, however, was 6.2% last month, slightly higher than our expectation of 6.1% and same as in Oct'21. CPI excluding vegetables was 6.7%, similar to what it has been in the previous five months.
* Overall, while the headline inflation was lower than expected, it doesn't change anything materially. We expect it to touch 6% by Jan'22. Core inflation though is likely to stay at 6%.
* Accordingly, the explicit normalization of the monetary policy will likely begin in Feb'22, with a 15bps hike in reverse repo rate.
Above views are of the author and not of the website kindly read disclaimer
