ECOSCOPE: Macro data in line with expectations; No reason for the RBI to change its stance
- CPI inflation eased marginally to 5.1% in January 2018 from 5.2% in the previous month – in line with our/consensus estimate of 5%/5.1%.
- Food inflation eased to 4.7%, led by a fall in inflation in fruits & vegetables and sugar & confectionary. Core CPI remained unchanged at 5%, even as inflation in ‘core services’ picked up slightly to 3.8%.
- IIP rose by a healthy 7.1% in December 2017, higher than our/consensus expectation of +6%. Consumer non-durables and capital goods grew in double-digits, aided by a favourable base, leading to a surge in IIP.
- We expect inflation to rise to over 6% in 1QFY19 on account of an adverse base effect. However, a high base is likely to pull down CPI inflation closer to ~4% in 2HFY19. Thus, we expect the RBI to look through such statistical effects and maintain status quo through 2018.