INSTITUTIONAL EQUITY RESEARCH

CPI Inflation
Eased to a 4-month low; better than expectation

INDIA | INDONOMICS | Update 13 January 2025

Key takeaways from December’24 CPI: Consumer Price Index (yoy growth, %)
• Correction in food prices, especially the second sequential month of a dip in vegetable
prices, tamed headline inflation to 5.2%. Q3FY25 CPI print stood at 5.6%; -10bps lower 10
than RBI expectations. This reinforces our stance of 25bps rate cut by RBI in the February
meeting while we will remain watchful of currency impact on export-import prices and 8
Trump’s initial policy impact. Ongoing USD-INR weakness is in the expected lines as
compared to other emerging markets. 6
• Headline inflation moderated to 5.2% vs. 5.5% in the last month vs. 5.7% in December’23;
Sequential correction of -56 bps vs. -15bps drop in the previous month. 4

• Core CPI fell to 3.7% vs. 3.8% in the last month; -5bps mom dip (ahead of expectation)
2
vs. 20bps rise in the last month.
• Heavy-weight food & beverage prices corrected by -120bps mom vs. -48bps dip in the 0
previous month. Vegetable prices fell by -7% after the -5% dip in prices in the last month.

Nov-20
Jun-21

Dec-24
Oct-23
Apr-20

Aug-22

May-24
Jan-22

Mar-23
Pulses and fruit prices eased by -1% each.
• Housing prices down by -0.7% mom (expected) while fuel & light price saw 0.6% rise.
Clothing/pan&tobacco prices up by 0.2% each. Rural and urban CPI (yoy growth, %)
• Services inflation pace stable at 0.2% as in the last month with highest price rise in 9 Rural Urban
medical care (0.4%). Other categories saw modest 0.1%-0.2% rise.
8
CPI eased to 4-month low: CPI for December’24 cooled down to 5.2% (PC/Consensus Estimate:
7
5.56%/5.3%) vs. 5.5% in the previous month and 5.7% a year ago. Sequentially, headline
inflation pace corrected by -56bps vs. -15bps in the previous month. Core inflation down to 6
3.7% vs. 3.8% in the last month with sequential drop of -5bps vs. 20bps hike in the last month.
5
• Housing prices also corrected by -0.7% mom vs. 0.2% rise in the previous month.
• Fuel and light price up by 0.6% mom vs. -0.1% drop in the previous month. 4
• Clothing & footwear/ pan & tobacco prices was up by 0.2% mom each. 3
• Pan/tobacco and housing prices remained stable in the month.
2
Nov-20
Jun-21

Dec-24
Oct-23
Apr-20

Aug-22

May-24
Jan-22

Mar-23
Vegetables price correction drive food inflation down: Food CPI down to 7.7% yoy vs. 8.2% in
the last month. Sequentially, food prices fell by -120bps vs. -48bps correction in the last month.
This was driven vegetable prices (down by -7%), pulses (-1%) and fruits (-1%).
Source: CSO, Phillip Capital India Research
Services inflation pace stable: Services inflation saw a 0.2% rise mom as in the last month, at
Anjali Verma, Research Analyst
4.2% yoy. On a sequential basis, sharpest rise was noted in medical care (0.4%). Modest rise in (+ 9122 6246 4115) [email protected]
household requisites (0.2%), recreation (0.2%), education (0.1%), personal care (0.2%), and
transport & communication (0.1%). Navaneeth Vijayan, Research Associate
(+ 9122 6667 9943) [email protected]

Consumer Price Index (growth, %)

___________________yoy growth__________________ ___________________mom growth_________________
CPI Components Jul-24 Aug-24 Sep-24 Oct-24 Nov-24 Dec-24 Jul-24 Aug-24 Sep-24 Oct-24 Nov-24 Dec-24
Food & beverages 5.1 5.3 8.4 9.7 8.2 7.7 2.5 -0.3 1.0 2.2 -0.5 -1.2
Pan, Tobacco & intoxicants 3.0 2.7 2.5 2.5 2.3 2.5 0.2 0.1 0.0 0.2 0.1 0.2
Fuel and light -5.5 -5.3 -1.3 -1.7 -1.8 -1.4 -0.2 0.4 0.1 -0.1 -0.1 0.6
Clothing and footwear 2.7 2.7 2.7 2.7 2.7 2.7 0.2 0.3 0.2 0.4 0.3 0.2
Housing 2.7 2.7 2.7 2.8 2.9 2.7 0.5 0.6 -0.1 0.9 0.2 -0.7
Medical care 4.1 4.1 4.1 4.0 4.0 4.0 0.3 0.4 0.3 0.4 0.3 0.4
Education 3.5 3.9 3.8 3.9 3.9 3.9 1.0 0.7 0.2 0.1 0.1 0.1
Recreation and amusement 2.2 2.4 2.4 2.4 2.6 2.7 0.3 0.4 0.2 0.3 0.3 0.2
Transport and communication 2.6 2.7 2.7 2.8 2.7 2.6 1.9 0.3 0.1 0.1 0.1 0.1
Personal care and effects 8.4 8.0 9.0 11.0 10.4 9.7 0.3 -0.2 1.2 1.9 0.3 0.1
Household goods & services 2.3 2.4 2.5 2.7 2.8 2.8 0.2 0.4 0.2 0.3 0.3 0.2
Miscellaneous 3.8 3.9 4.0 4.3 4.3 4.2 0.8 0.3 0.4 0.4 0.2 0.2
CPI 3.6 3.7 5.5 6.2 5.5 5.2 1.5 0.0 0.6 1.3 -0.2 -0.6
Source: CSO, PhillipCapital India Research

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 INDONOMICS CPI

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