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Below The perspective on CPI and IIP Data by Mr. Nikhil Gupta, Chief Economist, MOFSL Group.

Another month of great duo data

Lower than expected inflation and better IIP growth to keep RBI task simpler

-- Headline CPI inflation came in at 5.55% YoY in Nov'23, lower than the market consensus of 5.8% (and our forecast of 5.9%). Core inflation eased to 4.1%, though food inflation was at 3-month high of 8.7%. the details were also favorable:

1) CPI ex veggies was at 46-month low of 4.7% in Nov'23

2) Core services inflation was unchanged at 3.4%, the lowest in record (since 2015)

3) Details of 299 items suggest that 42% of the basket posted 5%+ inflation last month, similar to that on Oct'23 and the lowest since mid-2021.

Similarly, IIP grew 11.7%, better than our forecast of 11% and mkt consensus of 10.5%.

All said and done, we expect moderation in 3QFY24 real GDP growth and inflation to remain ~5.2% YoY in 4QFY24. The RBI, thus, doesn't need to think about easing at all and keep monetary policy unchanged in the coming months.

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