India Nov CPI - Food Falls But What’s In Store For Core? IDFC AMC Analysis

IDFC AMC Research Report

India’s November Consumer Price Index printed 5.9% YoY, well below consensus, driven by faster-than-expected disinflation in vegetables. In our note last month, we had highlighted encouraging early signs for India’s food inflation.

This includes the ongoing seasonal fall in vegetable prices, softer growth in prices of pulses and edible oils, healthy progress in rabi season sowing (particularly for wheat) andmoderation in global food prices and farm input costs.

Cereal inflation has been a concern and was strong in the November print too but rice stock is comfortable and there are recent reports of the Food Corporation of India considering offloading some of its wheat stock to ease prices.

However, core inflation (headline CPI excluding food and beverages and fuel and light) continues to remain elevated and sticky, averaging 6% for over two years and registering the same even in November.

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