Sales inflation at 4.91% in November
Consumer inflation in the country accelerated to 4.91% in November from 4.48% the previous month. Economists in a CNBC-TV18 poll had estimated inflation at 5.05% in November. (Learn more about retail price inflation)
Here’s how brokerage firms read the latest inflation numbers:
The November CPI was lower than expected, and led by downside surprises in the food and fuel categories. The report’s highlight was core inflation jumping 0.6 percent sequentially, its biggest rise in six months. Core inflation in December is expected to be impacted by the sharp rise in mobile prices.
Low inflation is coming to an end. The RBI is now expected to raise the repo rate by 100 basis points cumulatively in 2022.
Inflation could remain volatile year over year in the near term. An earlier than expected tightening of monetary policy can only be triggered by evidence of strong growth.
Consumer inflation has been driven by an unfavorable base and rising food prices. Inflation is expected to increase slightly in the near term.
The CPI inflation reading was below consensus. Headline inflation could reach 5.5-6% in the short term before easing. Standardization of policies should be gradual.
In the baseline scenario, a 50 basis point repo rate hike is expected from September 2022.