As expected, India's CPI inflation accelerated to 4.91% YoY in Nov-21 from 4.48% in Oct-21.
Download ReportNov-21 CPI: Ascent begins after transitory comfort
India’s retail inflation accelerated to 4.91% YoY in Nov-21 from 4.48% in Oct-21. Nevertheless, a softer than anticipated print along with headline inflation remaining well within the policy target band provides comfort. Sequential momentum eased because of supportive winter seasonality in food and reduction in petroleum taxes on fuel. However, core inflation continues to remain sticky at elevated levels on account of pass-through of high input prices amidst gradual unlocking of pent-up demand. Although there would be some deflationary impact from a catch up in winter food supplies along with the recent correction in global commodity prices, hike in telecom tariffs and upward adjustment in GST rate for select items of clothing & footwear would add upside pressure. On balance, we expect CPI inflation to average between 5.5-6.0% in the remaining four months of FY22 compared to an average of 5.2% in the first eight month of the fiscal year. Potential inflation risks from Omicron need to be on close watch.