February CPI Inflation At 6.4% Inline With Expectations: Motilal Oswal

Another rate hike of 25 bps in April 2023 is a given.

<div class="paragraphs"><p>A lady buying vegetables. (Photo: Aditya Rathod /Unsplash)</p></div>
A lady buying vegetables. (Photo: Aditya Rathod /Unsplash)

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Motilal Oswal Report

Consumer price index inflation stood high at 6.4% YoY in February 2023 compared to 6.1% in Feb-22. Although the Feb-23 inflation print is 10 basis points lower than the Jan-23 level, it is still higher than the Reserve Bank of India’s target upper limit of 6%. The number is exactly in line with our forecast and Bloomberg consensus.

Cereals inflation remained very high at 16.7% YoY compared to 16.3% in Jan-23. On the other hand, vegetable inflation came in at -11.6% YoY in Feb-23 versus-11.7% in Jan-23.

Consequently, this offset caused food inflation to remain sticky at 6% YoY in Feb-23. Moreover, CPI, excluding vegetables, came in at 7.6% YoY, lower than a 104-month high of 7.8% in Jan-23.

Other important observations in the inflation data:

  • Core inflation (housing, clothing and footwear and miscellaneous) came in at 6.3% YoY in Feb-23, similar to previous three months.

  • Standard core CPI (excluding food and energy), however, came in lower at 6.5% YoY in Feb-23 versus 6.6% in Jan-23.

  • While imported inflation (weightage =10%) stood at a three-month low of 6.9% YoY, domestically generated inflation rose to 6.4% YoY in Feb-23 versus 6.2% in Jan-23.

  • CPI in services remained unchanged at 5.1% YoY and that in goods inched down to 6.8% YoY in Feb-23 versus 5.9% in Jan-23.

  • Energy inflation came in at a four month low of 7.8% YoY in Feb-23 versus 8.6% in Jan-23.

Click on the attachment to read the full report:

Motilal Oswal Eco-CPI Inflation.pdf
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