CPI Review - Headline Inflation Slows As Food Prices Ease; Core Inflation Remains Sticky: Systematix
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Systematix Research Report
The easing of headline inflation to 4.3% in September 2021 was supported by softening of food prices and a strong base effect.
Core inflation remained sticky at 6%, under which prices of household goods continued to rise.
Rural headline inflation was lower than urban. However, under the core categories, rural inflation exceeded urban by 103 basis points.
As a result of elevated inflation, the real rates in the economy remain negative.
The real repo rate stood at down 2% and the short term money market rate stood at down 2.6% in Sep-21.
Barring food prices, the risks to overall inflation remain on the upside in FY22 and would likely emanate from-
hardening commodity prices,
persisting supply chain disruptions and
pass-through of input costs on consumer prices upon demand revival.
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