Acuité's CPI inflation forecast currently stands at 5.0% for FY23

Mr Suman Chowdhury, Chief Analytical Officer, Acuité Ratings & Research comments on CPI Jan 2022.

"India's headline CPI inflation has continued on its upside trajectory as per our expectations to 6.0% YoY in Dec-21 vs 5.7% YoY in Dec-21 and 4.9% in Nov-21. This is despite a sequential contraction of 0.3% and is primarily reflective of a lower base factor (CPI - 4.1% as on Jan-21). Typical of the winter season, the sequential food inflation has been negative for the second month at 1.1% and this is mainly characterised by better availability of vegetables and fruits. While there has been a sequential rise for clothing and footwear, housing, fuel and light as well as the miscellaneous, it is fairly moderate.

Nevertheless, core inflation continues to be elevated and at 6.2% for Jan-22, almost at similar levels as in the previous month. Higher oil and other commodity prices and its transmission to prices of manufactured products with gradual demand revival, is reflected in the elevated core inflation levels.

We have maintained our CPI inflation forecast of 5.5% for FY22 given our moderate view on food inflation given the crop forecasts and the steps taken by the Government to soften food and fuel prices. For FY23, our forecast currently stands at 5.0% vs 4.5% from RBI. The upside risks to this forecast, however, may increase if there is any sudden pass through of higher oil prices to the retail consumers, and the economy witnesses a meaningful recovery over the next 2-3 quarters."

Source : Equity Bulls

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CPI January2022 AcuiteRatings