India: CPI inflation expected to come in at 5.1% - TDS

Analysts at TDS suggest that India’s January CPI inflation is expected by the consensus to come in at 5.1% Y/Y, down from 5.2% in the prior month.

Key Quotes

“This would be good news for the RBI after six straight months of inflation acceleration. As the RBI mentioned last week, however, inflation will likely climb further in the coming months due the still adverse base effects, a lagged pass-through into CPI of higher oil prices in INR terms, and less marked than usual seasonal softening of winter food prices.”

“None of these factors are expected to dissipate entirely anytime soon, but signs that vegetable prices are starting to lose momentum suggest that CPI may also be close to its quarterly peak. Yet, Q2/Q3 2018 CPI is expected to print in the 5.1-5.6% range, so any deceleration is likely to be temporary until structural factors kick in in the latter part of the year.”

“December IIP will also be released and the consensus expects a sound, albeit slower than in November, print of 6.1% Y/Y (prior: 8.4%). A nascent economic recovery, however, may lead to an upside surprise.”