Inflation eases below 5% for the first time since December-2009 - ICICI Bank : Treasury Research

Headline inflation came in at 4.89% YoY in April 2013, lower than our expectations of 5.3% YoY and previous month's print of 5.96% YoY. The February print was revised sharply higher to 7.28% YoY from 6.84% earlier.

Primary inflation fell to 5.8% YoY in March from prior 7.6% YoY with food inflation declining to 6.1% YoY, from 8.7% YoY earlier.

Fuel inflation edged lower to 8.8% YoY in April from 10.2% in the previous month, mainly on account of a drop in non-administered component.

Manufactured products inflation fell to 3.4% YoY, lowest since December-2009. Moreover, core inflation dropped to 2.8% YoY, lowest level since February 2010.

We believe that the downward surprise provided by the April WPI and CPI prints would lead the RBI to continue with policy easing cycle and expect 25 bps repo rate cut in the June meeting.

Source : Equity Bulls

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