India: CPI inflation to edge higher to 2.40 y/y in January - TDS

Analysts at TD Securities are expecting India’s headline CPI to edge higher to 2.40% y/y in January from an 18-month low of 2.2% y/y in December, remaining near the bottom end of the RBI’s 2-6% inflation target.

Key Quotes

“Fuel and food prices have been the main dampening forces on inflation over recent months but the pace of decline in the latter is likely to slow.”

“Underlying inflation remains sticky and this could feed into inflation expectations and ultimately higher headline inflation. Pre-election government spending may also fuel inflation pressures.”

“We expect CPI to edge higher over the coming months and move back towards 5% y/y in H2 19.”