India Economy & Strategy - Structural Persistence In Inflation While Growth Spectrum Narrows: Systematix
Sticky-core inflation is driven by urban services and concentrating market power.
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Systematix Research Report
Multiple elements ranging from changes in consumption pattern, gaining share of services and market power concentration among Indian firms point towards structural persistence of inflation.
India’s industrial production data is characterised by coexistence of limited growth sectors and contraction at the broader level. What makes Reserve Bank of India’s role even more challenging is the continued rise in global interest rates and currency volatility.
Food and beverages inflation continues to rise on a seasonally adjusted basis by 0.8% in February 2023 month-on-month (6.3% YoY in Feb-23 versus 6.2% YoY in Jan-23).
Moderation in headline inflation is capped by the rise in food inflation which is majorly driven by the sharp rise in cereal inflation to 16.7% in Feb-23 from 16.2% in Jan-23 and 4% in Feb-22.
There is a prominent reversal in vegetable prices which bottomed out a month early this season; with a decline in the pace of contraction from -11.8% in Jan-23 to 11.6% in Feb-23.
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Wholesale Inflation Expectedly Dipped To 3.9% In Feb; Likely To Ease Further In March On A High Base: ICRA
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