India’s CPI inflation decelerated to a 15-month low of 5.66% YoY in Mar-23 from 6.44% in Feb-23
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India’s CPI inflation decelerated to a 15-month low of 5.66% YoY in Mar-23 from 6.44% in Feb-23. Although favorable statistical base effect had led consensus to expect a lower print, the actual figure nevertheless posted a downward surprise. Near term optimism stems from success in administrative interventions by the government in controlling wheat prices and early signs of moderation in core inflation pressures. IMD’s preliminary forecast of a ‘normal’ monsoon outturn in the upcoming Jun-Sep season offers comfort. However, risks on account of emergence of El Nino having a disruptive impact on monsoon later in the year and incomplete price pass-through in various items of inflation could render the anticipated process of disinflation a rather gradual one. Overall, we continue to expect inflation to moderate, with projection of FY24 CPI inflation maintained at 5.3%, down from 6.7% in FY23.