C ovid period Core inflation has consistently displayed a disinflationary trend validating the RBIs proactive measure to contain the demand pool pressures With food inflation particularly in perishables subsiding ID: 1029045
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1. 5things The headline number registered a significant drop of 181 bps, coming in at 5.02% YoY in Sep’23 (vs 6.83% in Aug’23), marking it’s first to make that steep a fall given interest rates have seen no hike for more than 6 months (barring the Covid period). Core inflation has consistently displayed a disinflationary trend, validating the RBI’s proactive measure to contain the demand pool pressures. With food inflation, particularly in perishables, subsiding, concerns about the transient price surges spilling over into core components have eased. However, non-perishable items continue to show resilience, with a substantial increase in pulse prices and a sustained rise in spice prices.Energy prices witnessed a dramatic fall, marking the first deflationary trend since November 2019, primarily due to a 13% YoY reduction in LPG prices. While gold prices continue to remain sticky, silver prices have seen their most substantial increase since July 2021.What’s next? although the global increase in crude oil prices has not yet translated into higher global petrol and diesel prices, these developments may come under closer scrutiny as geopolitical tensions continue to escalate.What does this mean for the monetary policy? The RBI has explicitly communicated its commitment to maintaining a focus on inflation targeting in its monetary policy approach. Can this disinflationary trajectory observed in both headline and core inflation heighten the likelihood of a potential interest rate cut in the near future? Possibly, yes. For our bonds’ view: Read ConverseMutual Fund investments are subject to market risks, read all scheme related documents carefully. Inflation September 2023: All you need to know
2. 5things This note is for information purposes only. In this material DSP Asset Managers Pvt Ltd (the AMC) has used information that is publicly available and is believed to be from reliable sources. While utmost care has been exercised, the author or the AMC does not warrant the completeness or accuracy of the information and disclaims all liabilities, losses and damages arising out of the use of this information. Readers, before acting on any information herein should make their own investigation & seek appropriate professional advice. Any sector(s)/ stock(s)/ issuer(s) mentioned do not constitute any recommendation and the AMC may or may not have any future position in these. All opinions/ figures/ charts/ graphs are as on date of publishing (or as at mentioned date) and are subject to change without notice. Any logos used may be trademarks™ or registered® trademarks of their respective holders, our usage does not imply any affiliation with or endorsement by them.Mutual Fund investments are subject to market risks, read all scheme related documents carefully.Mutual Fund investments are subject to market risks, read all scheme related documents carefully. Disclaimer