India’s CPI inflation accelerated sharply to a 14-month high of 6.21% YoY in Oct-24 from 5.49% in Sep-24.
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The sharp jump can be largely attributed to sequential hardening of food prices, which continue to suffer the impact of erratic weather and recent import duty hikes. On a comforting note, the consolidated fuel inflation remains in negative territory, while core-core inflation continues to hover at subdued levels. We believe Oct-24 inflation print will form the peak as there is emerging evidence of price reversal in certain key food items. The combination of kharif output coming on board and a favorable winter seasonality augur well for moderation in food price pressures. Mindful of the risks, we maintain our FY25 CPI inflation forecast of 4.7%.