BusinessAdmin11/12/2025
by Mr. Sreejith Balasubramanian, SVP & Economist – Fixed Income, Bandhan Mutual Fund for your perusal.
October CPI at 0.25% y/y, after 1.4% in September, was slightly below our expectation of 0.4%. This was based on lower food price momentum across sub-categories, with momentum in cereals, pulses, vegetables, fruits, vegetable oils and spices being negative. Price momentum in some of the core categories (clothing & footwear, health, transport & communication ex-fuel, recreation & amusement) were also negative, likely due to GST-rate cuts. However, Core CPI (headline excluding food & beverages, fuel & light) increased to 4.4% (4.3% in September) but momentum excluding gold and silver moderated. Thus, while services inflation stayed flat at 3.2% y/y, core-goods-ex-gold-silver moderated.
Despite some rising real-time vegetable prices, we expect overall CPI inflation to remain benign in the next few months. Factors like a good Kharif crop, disinflationary forces from Chinese goods, moderate growth backdrop, etc. will play a role. Our base case is for the RBI to cut the repo rate by 25bps at the December meeting.