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Below the Perspective on CPI & IIP data by Mr. Nikhil Gupta, Chief Economist, MOFSL Group

No surprises again; Monetary easing still some time away

May headline inflation came in at 4.75%, April IIP at 5%

Headline inflation was largely in line with the BMBG consensus and IIP growth was slightly better. Today's data will not change any views on India's monetary policy.

Some CPI details:

-- Core inflation stood at a new low of 3.1% last month

-- Excluding veggies, headline inflation was 3.5% YoY, same as in the previous two months

-- Inflation in core services dropped below 3% for the first time ever

-- About 26% of CPI basket posted 5%+ inflation last month, the lowest level since Jan-20

Going forward, headline inflation could under-shoot the RBI projections in 1HFY25, increasing the pressure to cut rates (or change its stance). We believe, however, that rate cut is likely only in late CY24 or early CY25.

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