December consumer inflation data sparks talks of RBI policy shift; experts weigh in
The December CPI figure of 5.69% has led to discussions about potential changes in RBI's stance on monetary policy. Some market observers, including Citi India and ICICI Securities Primary Dealership, are speculating that the RBI might consider adjusting its stance as early as February.
The consumer price index (CPI) data for December came in at a four-month high of 5.69%. However, it was below market estimates and lower than the Reserve Bank of India's (RBI) forecast triggering discussions about potential changes in RBI's stance on monetary policy.
Some market observers, including Citi India and ICICI Securities Primary Dealership, are speculating that the RBI might consider adjusting its stance as early as in February.
In a detailed discussion with CNBC-TV18, Samiran Chakraborty, Chief India Economist at Citi, shared insights, stating, “We think that for the January-March quarter, there is about a 60 bps of forecast revision possible by RBI from its current estimate of 5.2%; we are at 4.6%. So that is quite a substantial drop in inflation which might make the MPC think differently about their trajectory going forward.”
Based on a survey conducted by CNBC-TV18, the Consumer Price Index (CPI) for December was anticipated to be 5.9%, compared to the previous month's figure of 5.55%. Retail inflation registered at 5.55% in November, showing an increase from 4.87% in the month prior.
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Year-on-year, there was an increase in food inflation, while core inflation, which excludes volatile factors like food and energy, decreased to 3.77%. This decline was primarily driven by a seasonal contraction in the housing sector. Madhavi Arora from Emkay Global predicts that the downward trend in inflation will become more apparent in the fourth quarter, with an expected average of 5.1%. Additionally, she anticipates the core inflation to be below 3.75%.
Also Read | India's retail inflation rises to 3-month high of 5.55%, industrial production at 16-month high of 11.7%
A Prasanna of ICICI Securities Primary Dealership also weighed in, highlighting, “Worries about food inflation which was there earlier and there are other indicators like rabi sowing, global food prices and crude prices also. So, broadly the outlook looks favourable, and we are entering seasonally a period where food inflation will come, and core inflation has moved below 4% and growth is entering a phase where it’s also slowing down.”
For the entire discussion, watch the accompanying video
(Edited by : Shweta Mungre)
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