NDTV Profit's special research section collates quality and in-depth equity and economy research reports from across India's top brokerages, asset managers and research agencies. These reports offer NDTV Profit's subscribers an opportunity to expand their understanding of companies, sectors and the economy.
SBI Research Report
Consumer price index inflation rose to four-month high of 5.69% (slightly lower than our expectations of 5.98%) due to increase in food price inflation. Inflation in all the other components increased at a lower rate when compared to the previous month.
The pick-up in inflation was driven by an unfavorable base effect of around 10 basis points. The good thing is that CPI and core CPI remain in equilibrium long run relationship with CPI adjusting towards the core CPI, which has continued its downtrend from the last 12 months to reach 3.76% in December 2023.
The softening is visible across sub-groups such as clothing and footwear, household goods and services, recreation and amusement, pan tobacco and intoxicants, education and personal care and effects.
The divergence of headline CPI from core CPI, in place of convergence, is due to high food CPI in general, and fruits, vegetables, spices, and cereals CPI in particular.
These prices are not expected to come down much but are expected to hold at nearly same level in Q4 FY24. Once the aforesaid four item wise CPI comes under control, headline inflation will drastically reduce to come near the mid-point of Reserve Bank of India inflation target of 4%.
We expect CPI inflation to come down to 5.0% by March 2023.
Interestingly, the latest average modal prices in e-NAM mandis are higher than the minimum support price for FY24 for majority of crops. Even the mandi prices is higher than the MSP for most of the crops. Thus, it seems that the Government's efforts to increase MSP is now making a clear impact as MSP is now becoming a floor for prices at physical/digital marketplace.
We believe there is a structural change in pricing behavior.
Click on the attachment to read the full report:
DISCLAIMER
This report is authored by an external party. NDTV Profit does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of NDTV Profit.
Users have no license to copy, modify, or distribute the content without permission of the Original Owner.
Essential Business Intelligence, Continuous LIVE TV, Sharp Market Insights, Practical Personal Finance Advice and Latest Stories — On NDTV Profit.
