Can't conclude inflation is slowing down: Former MPC Member

India's October consumer price index (CPI) came in at 6.77 percent in line with market estimates and is on course to dip below 6 percent by March. The WPI inflation has fallen a little more sharply in October triggering hopes that lower wholesale prices will start getting passed on to consumers and therefore bring down CPI further.

Meanwhile, globally, the US October CPI number was also lower than what the market expected, coming at 7.77 percent. In an interview with CNBC-TV18, Abhishek Upadhyay, Senior Economist, ICICI Securities  and Mridul Saggar, IEPF Chair Professor, National Council of Applied Economic Research and Former Monetary Policy Committee Member discussed at length the macros.

The former MPC member said categorically that the recent data releases, cannot conclude that price pressures are slowing down.

“The CPI number was a delta zero, it is neither positive nor negative. There are 2-3 positives with this number. One, the headline inflation has dropped by 64 basis points; this has led to falling food inflation from 8.4-7 percent. Second, inflation isn't yet becoming more generalized than it already has. Third, some momentum in core inflation seems to have come down,” said Saggar.

However, the worry is that core inflation is still sticky at six percent for the last 18 months.

“There has been a significant pickup in the average momentum of the headline inflation. So that is one worry I have still that is being paused,” said Saggar.

ICICI Sec economist, Upadhyay, agrees that food inflation is still not showing signs of abating adding that rate hikes will continue unless crude oil prices come off substantially.