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The moderation will mainly be aided by moderating commodity prices, especially crude oil, government intervention and surplus reservoir levels to cap food price surges, it said
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The Reserve Bank of India (RBI) is likely to raise the repo rate by 6 per cent by the 2022 end, said the Kotak Mahindra Bank on Monday
Kotak in a report said, "We maintain our FY2023E CPI inflation estimate at 6.5 per cent. We also retain our view that the MPC will continue with calibrated repo rate hikes towards 6 per cent by end-CY2022.
The consumer price index (CPI) in August was mainly driven by a rise in food prices. Sequentially, headline CPI inflation increased by 0.5 per cent broadly at the same pace as July. Notably, fuel and light inflation moderated by 100 bps to 10.8 per cent.
"We expect the inflation prints over the coming months to remain elevated albeit moderating gradually below MPC’s upper threshold of 6 per cent in 4QFY23," the report said.
The moderation will mainly be aided by moderating commodity prices, especially crude oil, government intervention and surplus reservoir levels to cap food price surges and ease global supply-chain pressures, it said.
"Accordingly, we expect the average CPI inflation trajectory to be lower than the RBI’s estimates by around 60 bps in 1HCY23," the bank mentioned in the report.