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Below the Quote on CPI Numbers by Suvodeep Rakshit, Chief Economist, Kotak Institutional Equities

The June CPI inflation print of 2.1% was lower-than-expected on the back of lower food inflation. Core inflation continues to inch higher on the back of gold prices but remains much more comfortable without the impact of gold. Overall, the June CPI inflation print, along with the deflation in June WPI inflation, provides ample room for the RBI to lower repo rate. The average CPI inflation in FY2026 is likely to be much lower than RBI’s estimate of 3.7%. We continue to expect the RBI to pause in the August policy as it watches the monsoon outturn to ascertain durability of food inflation trends. While earlier we were seeing room for a cut in the December policy, the June CPI print has increased the probability of RBI reducing repo rate by 25 bps in the October policy.

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