Acuité's forecast currently stands at 5.0% for FY23 - CPI Feb-22

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

"India's headline CPI inflation has continued to climb up gradually as per our expectations to 6.07% YoY in Feb-22 vs 6.01% YoY in Feb-22 and 5.7% in Nov-21. This is just not the base factor at play since there is a sequential expansion of 0.24% in the CPI as compared to a contraction last month. While the latest print may not still increase the average CPI inflation print beyond 5.5% for FY22, it is to be noted that it does not yet take into account the impact of the geo-political conflict between Russia and Ukraine and the incremental effect of crude oil beyond USD 100 per barrel.

Typical of the season, the sequential food inflation has been flat 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 for now.

Nevertheless, core inflation continues to be elevated and at 6.2% for Feb-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.

For FY23, our forecast currently stands at 5.0% vs 4.5% from RBI. The upside risks to this forecast, however, has built up with the sharply higher prices of crude oil and at least a partial pass through to the retail consumers in the near term along with a meaningful recovery in consumption demand over the next 2-3 quarters."

Source : Equity Bulls

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