15 June 2015

CPI Inflation - Remains Benign:: Edelweiss

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CPI inflation for May remained largely stable at 5% YoY (below our expectation of 5.2%). Headline reading as well as details of the data are encouraging. Food inflation continued to soften; barring a few categories (pulses etc), there is no impact of unseasonal rains on food prices. As regards core, the pick-up was essentially on account of fuel price hike. Among other components, price trend remains benign.
In the coming months, CPI may see a marginal rise led by hike in fuel prices, rise in food prices in a few categories etc., but the trajectory should turn down again, thereafter. Monsoon progress and government policy response (MSPs, managing buffer stocks etc) remain key variables to watch in the near term.


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