According to Jin Shi Data, Sriram Shaha, the chief emerging markets economist at Capital Economics, stated that India’s overall consumer price index may have bottomed out after hitting a 75-month low in May. This validates the Reserve Bank of India’s decision to cut interest rates early and suggests that the easing cycle has ended.
He added that core inflation may continue to hover around 4% in May. As economic growth persists, potential price pressures may increase in the coming months. However, given that household inflation expectations remain subdued, core inflation is not expected to rise significantly. Any rebound in inflation may be gradual, indicating that the Reserve Bank of India’s repo rate could remain at 5.50% for some time.