India has posted five consecutive increases in headline CPI till December 2015. January 2016's inflation is expected to be at the same level as in December 2015.
"We expect India's headline CPI for January 2016 to print at around 5.6% yoy, the same as the December 2015 CPI print", says Societe Generale.
Overall food inflation continues to be contained, as vegetable prices continue to moderate and pulse prices show certain signs of easing after increasing by almost 50% in the past year. Food prices index is expected to show a decline on a monthly basis in January, the second consecutive month. However, the continuous rise in core inflation is a concern as the service sector inflation is increasing.
"We expect the service inflation to edge up above 4% yoy. Quite intriguingly, though, the service sector deflator will likely remain in negative territory as was the case in the previous quarter", says Societe Generale.
