CPI and WPI: Prasanna – Head Global Markets Group, ICICI Bank

“Headline CPI came close to expectations at 2.2% YoY. This was led with continued deflation in food group while the broad-core index threw up a negative surprise with core inflation remaining at 5.7%. Despite the sharp fall in petrol and diesel prices in December, the core inflation was elevated. This was due to the high sequential inflation seen in health and education sub-groups. Earlier today, WPI came in much lower than expected which was aided by broad based declines across most categories, especially core. CPI trajectory is likely to remain benign till H1 FY20, after which it may show an uptick. We continue to expect the monetary policy committee to change the stance to neutral in the February policy and remain on an extended pause on policy rates.”