CPI inflation moderates slightly but remains elevated - Angel Broking

The combined (rural + urban) Consumer Price Index (CPI) inflation for March 2013 moderated somewhat, at least pausing the trend of an uptick seen in the past five months. It stood at 10.4% in March 2013, slightly below the 10.9% rise reported in the previous month, as inflation in food and related products cooled off to 12.3% from the above-13.0% mark in the three preceding months. Worryingly however, the core CPI inflation (excluding food and fuel components) inched up for the third straight month to 8.5% from 8.4% in the previous month.

At this juncture, we believe the wide wedge between WPI and CPI inflation numbers, and negative real interest rates for savers due to high CPI inflation, are also keeping the RBI from adopting a more dovish approach. Hence, moderation in CPI inflation is likely to be a pre-requisite for a meaningful change in monetary policy stance.

Source : Equity Bulls

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