Making Sense

Headline CPI rose 4.85% yoy and flat mom. Q4 FY24 inflation averaged 5.01% in line with RBIs estimates.  Largely a benign CPI print with Fuel and Light driving major disinflation. Miscellaneous group (Household G&S, Health, Transport and communication, recreation and amusement, education, personal care and effects) rose 0.28% mom. The fuel disinflation is on account of cut in prices of LPG (Mar 8) / prices of Petrol and Diesel (Re. 2 on Mar 15).  Prices of Meat and Fish (wt. 3.61%) saw prices rise 1.3% mom. Interestingly, in a retail shop in Bandra from where we buy Meat, the gentleman informed that the price has gone up from Rs. 240 a kg to Rs. 280 a Kg. Price of Fruits (wt 2.5%) saw a 1.77% mom decline. Personal care ad effects category saw 1.37% mom rise in prices.  Price of Spices has seen good deceleration over the last 3 months.  The Core CPI rose 3.25% mom. Going ahead the base effects are going to start kicking in which could impede the momentum of decele...

India CPI came in at 5.09% and Core CPI at 3.34%. Eggs / Vegetables /Pulses / Spices rose in double digit Yoy while oil and fat fell (-14% yoy). Concerning component was the meat and fish basket which grew 2.30% mom and Housing which grew at 0.50% mom.  Spices though up 13.50% yoy were down 2% mom and likewise for pulses and products , down 0.83% mom.  RBIs Q4 projections for CPI are at 5.00% which translates into Mar reading of 4.80%. The number does not change anything meaningfully for the Central Bank. According to my own estimates, CPI is likely to average 5.20% in Q1 FY25 as against RBIs estimate of 5.00% which leaves very little wiggle room for any rate action.  RBIs repeated stance has been to guard against generalization of food price pressures and with weather uncertainty and low reservoir levels, rate action window open in Q2 FY2025. 

India CPI is likely to come in at 4.90% with Reuters Poll showing consensus estimates at 5.02%. My Estimates for Trade Deficit are at $ 16 bn much below street estimates of a reading of $18.30 bn.   It's not the absolute number which is important but you have to understand where will the delta come from. It is important to understand that if Merchandize trade + services number comes in line with previous numbers, averaging $ 6.60 bn combined deficit we will end the year with a current account deficit of $ 29 bn. However, if the trade data (gds& services) exhibits last month's trend of $ 1.3 bn deficit for the next 2 months, then the Current account deficit will be well under $ 20 bn. 

India's headline CPI decelerated to 5.10% yoy from prior 5.69% and the Core CPI further decelerated to 3.59% yoy from prior month's figure of 3.89%.  MoM Decline in headline prices was to the tune of 0.11%.   The Headline number comes in line with Reuters Poll Estimates. The data does not do much to alter the inflation trajectory and the resultant rates trajectory.  General Index Wt YoY Growth in % 1) Food and beverages 45.86                    7.58 2) Pan, tobacco and intoxicants 2.38                    3.28 3) Clothing and footwear 6.53                    3.37 4) Housing 10.07                    3.20 5) Fuel and light 6.84                   -0.60 6) Miscellaneous 28.31       ...

In the India Week Ahead , I estimated CPI print at 5.60%. The CPI release showed CPI for Dec at 5.69%. FY24 Q3 average CPI is seen at 5.37% which is lower than RBI projection of 5.60% for the quarter. The headline inflation was driven by elevated Food and Beverages segments with the usual culprit seen as Cereals, Fruits, Vegetables, Pulses and Products and Spices. Oil and Fats was the only category that showed sharp deceleration in prices from a year ago. General Index Wt YoY Growth 1) Food and beverages 45.86 8.70% 2) Pan, tobacco and intoxicants 2.38 3.65% 3) Clothing and footwear 6.53 3.61% 4) Housing 10.07 3.63% 5) Fuel and light 6.84 -0.99% 6) Miscellaneous 28.31 4.07% India's Core Inflation grew 3.89%, exhibiting disinflation, falling to the lowest level...

India CPI came in below consensus estimates of 5.5%. Headline number came in at 5.02% yoy and Core CPI number (excl F&B + Fuel and Light) came in at 4.53%.  Headline number has decelerated from a peak of 7.44% in July to 5.02% in Sep 2023. The Q2 inflation averaged 6.43% in line with RBI estimates. Under the food category, cereals, pulses and spices continue to be sticky. The core print has been steadily decelerating from the 6.00% peak seen in Feb 2023 to 4.53%.  With the current deceleration, my estimates for Q3 average 5.36% (RBI estimates 5.60%) and for Q4 average 4.80% (RBI estimates 5.20%). Next Financial Year Q1 will be sticky around 5.07% and Q2 will be closer to 4.2% average.  Fed Fund rates will also be an important determinant of domestic rate policy. Fed Fund Futures Market are pricing in a full rate cut by June. Assuming the current interest rate trajectory plays out in the US as per market pricing and domestic inflation averages 4.80% by Q4 of this FY, R...