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Below the Comments on CPI data by Nirav Karkera, Head of Research and Fund Manager, W by Groww

Inflation has crossed the RBI's 6% upper limit, and about half of it is coming from food. Onion and garlic prices have shot up, and rural households feel this more because food takes a bigger share of what they spend.

Excluding food and precious metals, and underlying inflation is close to 4%. Rent, healthcare and education are rising slowly, and gold and silver prices fell through October, which should ease some pressure in the coming months.

What we are watching is whether food costs spread. Eating out is already about 10% more expensive than a year ago. The bigger risk is fuel. Pump prices at state-run outlets have not moved since May, but if crude stabilises at elevated levels and the rupee at weaker, prices could rise further. However, early developments on the global and geopolitical factors exerting supply-side pressure, that has been lifting crude prices, now offers a higher probability on expected resolution.

The GST-cut effect on YoY numbers is largely behind us now. From here, what matters is how fast prices rise each month, and directionally it is still trending ahead. We don't expect quick relief. Winter vegetables should help, but probably not before early next year.

The RBI has already started raising rates, and odds are in favour of a measured hike in December.

For investors, there is limited reason to react in the form of portfolio decisions. Stick to asset allocation, keep bonds on the shorter side for now, and for stocks especially in context of inflation prints, favour companies that can pass on higher costs.

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