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August Inflation print on expected lines

ICICIdirect Research 13 Sep 2024 DISCLAIMER

India’s CPI inflation in August 2024 came in at 3.65% as against market expectation of around 3.5% and as compared to 3.6% in July 2024. While the print is marginally higher from record low print in July, the print is the second lowest of the series.

Overall the YoY inflation remain high in items like Vegetables, Pulses, Cereals and Fruits. However, MoM Vegetable prices decline by -2.5%. Cereals continue to saw MoM rise of 0.6%. Overall total CPI print remain flat MoM.

Overall, CFPI food price inflation for August was marginally higher at 5.66% compared to 5.42% while core inflation was flat at 3.4%.

Within core, most items remain flat with higher weight items like Fuel and Light (-5.3%)and Transport and communication (2.3%)remain lower.

The RBI's inflation projection for Q2FY25 is 4.4%. Next month's inflation expectation is around 5.0% which will result in average Q2 print at 4.1%, 30bps lower than RBI projection.

Lower crude oil prices and potential price cut in retail prices before state election along with normal monsoons bodes well for inflation outlook

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