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Below the perspective on CPI Data by Mr. Nikhil Gupta, Chief Economist, Motilal Oswal Financial Group.

CPI details suggest that

Standard core inflation (ex food & energy) was 3.7%, first sub-4% reading in almost four years

 Imported items (weight = 12%) led to lower headline inflation, as it fell for the 10th successive month.

Services inflation (weight = 23%) eased to new low of 3.2% YoY last month, the lowest in record (since 2015).

Less than a third of the CPI basket posted 5%+ inflation last month, the lowest in four years and similar to 30% average in CY19.

Overall, we see inflation hovering between 5-5.5%, led by food in 1HCY24, before easing in 3Q towards 4% and rising back to 4.5-5% in the next two quarters. Thus, we don't see any monetary policy action based on inflation this year. It will be determined by the domestic growth trajectory (if it turns out much weaker than the general forecast of 6.5-7%) or if the US FED makes a sharp move.

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