01-01-1970 12:00 AM | Source: Motilal Oswal Financial Services Ltd
Perspective on CPI data for the month of November By Mr. Nikhil Gupta, Motilal Oswal
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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.

 

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