According to a Morgan Stanley analysis, India's Consumer Price Index (CPI) inflation is expected to decrease from 6.2% in October to 5.5% year-over-year in November. According to the research, a sequential dip in the monthly Consumer Price Index (CPI) is anticipated, mainly due to a decrease in food costs. Another important element attributed to the total reduction was a slowing in the core CPI, which does not include food and fuel.
Morgan Stanley stated, "We expect CPI inflation to edge to 5.5% year-on-year in November from 6.2% in October, supported by moderating food prices, while core inflation ticks up and fuel prices continue to decline. On a sequential basis, we anticipate the index to contract due to falling food prices and a deceleration in core CPI."
Since high food costs have been a major contributor to inflation in recent months, the reduction in inflation provides respite to both consumers and policymakers. This lower trend is further supported by the drop in fuel prices, which lessens the strain on corporate expenses and household budgets. The Reserve Bank of India's (RBI) attempts to preserve price stability while promoting economic growth are consistent with the expected slowdown in CPI inflation. The central bank may have more leeway in deciding on monetary policy if the inflation trend continues to slow.
In conclusion, the expected decline in CPI inflation for November relieves consumers and policymakers alike, with moderating food and fuel prices playing a significant role. The Consumer Price Index (CPI) measures the average change over time in the prices paid by urban consumers for a basket of goods and services, reflecting inflationary trends. This easing trend aligns with the RBI's goal of balancing price stability and economic growth. If inflation continues to subside, it may offer the central bank more flexibility in shaping future monetary policy.
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