India’s retail inflation decelerated to a 12-month low of 5.72% YoY in Dec-22 from 5.88% in Nov-22
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India’s retail inflation decelerated to a 12-month low of 5.72% YoY in Dec-22 from 5.88% in Nov-22. Moderation in headline inflation was accompanied by a sequential fall in price momentum. The downward movement was predominantly on account of easing of food inflation, even as core inflation refused to budge from 6%+ levels. We find data to have interesting nuances with implications for both doves and hawks within the MPC. On balance, the pleasant surprise in inflation data for two consecutive months and comfort from commodity prices/ moderation in growth momentum to provide a downward bias. We fine tune our FY23 CPI inflation estimate to 6.5% from 6.7% earlier while maintaining FY24 CPI inflation outlook at 5.3%. The RBI is expected to announce 25 bps hike in Feb-23 policy review – the last rate move in the current cycle.