India: Weak CPI inflation numbers - Nomura

Analysts at Nomura note that India’s CPI inflation was lower than expected in September, increasing only marginally to 3.8% y-o-y from 3.7% in August, caused by low food price inflation and seemingly brushing off the negative supply-side shocks from the weaker currency and higher oil prices.

Key Quotes

“Core (CPI ex-food and beverages, fuel) inflation moderated to 5.8% y-o-y in September from an upwardly revised 6% in August, suggesting weaker demand is limiting the pass through from higher input costs to consumers. As the Reserve Bank of India (RBI) has raised rates by a cumulative 50bp, we believe it will wait and watch policy transmission play out, and keep rates on hold.”