Nov 12, 2024 5:17 PM IST
India CPI Inflation Data LIVE: Aditi Nayar, Chief Economist and head of Research and Outreach at ICRA, on CPI
“The CPI inflation worryingly soared further to a 14-month high of 6.2% in October 2024, breaching the upper limit of the MPC’s medium-term target range of 2-6%. The sequential hardening in inflation was largely led by the food and beverages segment, followed by a mild uptick in the core items.
The food and beverages inflation surged to an eye-watering 9.7% in October 2024 from 8.4% in the previous month, amid an uptick in seven of the 12 food groups. Vegetables inflation hardened to a 57-month high of 42.2% from 36.0% in September 2024, which weighed on the food and beverages and, consequently, the headline inflation prints in the month. Excluding vegetables, both these prints were much more benign, at 4.3% and 3.6%, respectively, albeit slightly higher than the readings seen in September 2024.
The all-India reservoir storage stood at 86% of the live capacity at full reservoir level (FRL) as of November 7, 2024, which is likely to support rabi sowing in the ongoing season. However, concerns related to the low inventory levels of di-ammonium phosphate (DAP) and reservoir storage in some states like Punjab may impede the progress of sowing and thus are key monitorables for the rabi season.
With the CPI inflation breaching the 6% mark in October 2024 and expected to exceed the MPC’s estimate for Q3 FY2025 by at least 60-70 bps, a rate cut in the December 2024 policy review appears ruled out, in spite of our projection of a sub-7% GDP growth print for Q2 FY2025. We anticipate that a shallow rate cut cycle of 50 bps may commence in February 2025 or later.”