June CPI Inflation was recorded at 6.26%, which was lower than consensus expectations of 6.7%. CPI Inflation in the month of June also moderated from 6.3% in May 2021 to 6.26% in June 2021. Food Inflation in June was recorded at 5.5%, which increased from 5.01% in May 2021.

Credit Suisse says that this time, Headline CPI Inflation remained largely unchanged in June on a Month-on-Month basis. But at the same time, seasonally adjusted MoM momentum in June was lower by 0.3% versus the last 10Year average.

Fall in core CPI Inflation was broad-based but led by personal care and pan, tobacco. Food inflation rose by 34basis points MoM, driven by the sharp rise in oils. Also saw a sharp rise in fats but this was offset by the fall in prices for eggs, meat and fish.

The Vegetable prices continued to rise in July after a 5% rise in June. Going ahead, they expect that due to lower duty on palm oil, Food CPI Inflation can ease to 4.5% in July. Also, this time MPC is likely to look beyond the 1Q data. Overall, Credit Suisse expects that YoY trends should moderate going forward as high base kicks in for Inflation.

On the other hand, CITI says that the Headline CPI Inflation remained broadly unchanged. CITI thinks this is a sharp drop in Core inflation sequential momentum. They highlight that similar easing of inflation momentum was seen after the first wave shocks too.  

They retain their FY22 headline CPI inflation forecast at 5.9% YoY and see no major change happening at the August RBI MPC meet