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We expect consumer price index inflation to come in at 6.15% in Feb-23, moderating from 6.52% in Jan-23.
CPI – food and beverage inflation is seen at 5.82% in Feb-23 versus 6.2% in Jan-23. While cereal prices continued to witness some uptick, vegetable prices declined on month-on-month basis.
Core CPI inflation is also expected to moderate marginally to 5.9% in Feb-23 from 6.1% in Jan-23.
With CPI inflation remaining above the Reserve Bank of India’s upper tolerance band of 6%, we see high probability of an additional 25 basis points rate hike at the April Monetary Policy Committee meeting.
The Wholesale Price Index inflation is likely to come in at 3.4% in Feb-23, down from 4.73% in Jan-23. WPI food articles inflation is seen at 3.3% in Feb-23, up from 2.4% in Jan-23 on a low base.
Meanwhile, core WPI inflation is likely to moderate to 1.9% in Feb-23 from 3.3% in Jan-23, supported by easing prices of industrial commodities.
The Index of Industrial Production likely grew by 4.8% YoY in Jan-23 versus 4.3% in Dec-22. Core infrastructure industries’ output grew by 7.8% YoY in Jan-23 versus 7% in Dec-22.
However, the S&P Manufacturing Purchasing Managers’ index had moderated to 55.4 in Jan-23 from 57.8 in Dec-22.
We expect the current account deficit to moderate to $20.9 billion or 2.6% of gross domestic product in Q3 FY23, down from $36.4 billion or 4.4% in GDP in Q2 FY23. A lower trade deficit and robust services exports and remittances will aid moderation in CAD.
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