CPI Data - Dec 14, 2020 - Suman Chowdhury, Chief Analytical Officer, Acuité Ratings & Research

"The decline in the CPI inflation print in Nov 2020 to 6.93% from 7.61% in Oct 2020 has definitely come as a relief to the bond markets. The food inflation has expectedly dropped to 8.76% on a YoY basis from 10.2% in Oct with a cooling down in the prices of both vegetables and animal protein items. This indicates that the supply challenges have eased somewhat and with a higher base for Dec 2020, the CPI print is expected to come down further next month. Nevertheless, in our opinion, the risks of CPI continuing to be above the MPC comfort level of 6.0% continue to be high due to increased retail fuel prices, the steady increases in prices of other key commodities and a significant growth in currency with the public which has risen 23.1% on a YoY basis. We will remain cautious on the inflation trajectory over the next 1-2 quarters."

Source : Equity Bulls

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