India’s CPI inflation accelerated sharply posting a 15-month high at 7.44% in Jul-23 compared to 4.81% in Jun-23
Download ReportQuantEco Research || Jul-23 CPI - A red-hot print
India’s CPI inflation accelerated sharply posting a 15-month high at 7.44% in Jul-23 compared to 4.81% in Jun-23. Yet again, the metric surprised market participants who were expecting a further escalation in inflation, sizeably on the upside (Refinitiv consensus: 6.40%, QuantEco forecast: 6.69%). The data points underscore two broad takeaways for Jul-23 inflation story – (i) Food inflation was the key culprit behind driving headline inflation higher (ii) It’s not just vegetables (or tomatoes per se) that are driving price pressure within food. Clearly, tomato dominated inflationary concerns have morphed into broad-based price pressures seen across other food categories such as cereals, pulses, spices among others. The sharp upside in Jul-23 print implies a strong likelihood of average inflation surprising RBI’s recently revised estimate of 6.2% on the upside for Q2 FY24. We hold our recently upwardly revised FY24 CPI inflation at 5.5%. This also is likely to push the window for a rate pivot from Q1FY25 to Q2 FY25.