India’s Dec-23 CPI inflation despite climbing to 5.69%YoY from 5.55% in Nov-23 appears fortuitous in many ways.
Download ReportQuantEco Research || Dec-23 CPI inflation - A fortuitous moderation
The Dec-23 CPI print at 5.69% saw abating price pressures in some food categories esp. spices, sugar, pulses. We expect subsequent inflation prints could remain in the vicinity of 5.0% (and core sub 4.0%) - on track towards our FY24 inflation estimate of 5.3%. Implicit in our assumptions, is no flare up in crude oil prices, which remain on watch amidst brewing tensions in the Red sea region. We are also baking in some possible downside to Rabi output into our forecasts, with slower traction in ongoing Rabi sowing compared to last year, and possibility of El Nino remaining strong up to Apr-23. For FY25, we expect CPI inflation to moderate to 4.8% on average.