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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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BQ Prime’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 BQ Prime’s subscribers an opportunity to expand their understanding of companies, sectors and the economy. 

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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