India's March 2016 CPI likely to rise to 5.8%

India's CPI showed an upside surprise slightly, standing at 5.0% yoy, rising from that of September print of 4.4%. Underlying inflation stays in check, even with a raise. The October Core CPI appears manageable at 4.14% y/y, however remains considerably below historical averages.

Food and beverages inflation is at 5.3%, with hikes in pulses, cooking oil and vegetables(onions). Government's pro-active food management is shown in the lack of broad-based food price increases, even at poor monsoons. Sugar prices, dairy products and cereals softened in October and continuing in November.  

With the rebound in onion and pulses prices, the potential risks of hike to H2 2015-16 inflation might be softened materially in recent months.

"The Reserve bank of India's (RBI) latest monetary policy statement on 29 September lowered its March 2016 CPI inflation forecast by c.20bp to 5.8%, moving closer to our forecast of 5.7%", says Barclays in a research note.