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July CPI Inflation Jumps to 7.4% on Food Prices (CARE Ratings) Retail inflation has sustained its upward trajectory for the second consecutive month, surging to 7.4% in July from 4.9% in the previous month. Consequently, the Consumer Price Index (CPI) inflation has breached the Reserve Bank of India's (RBI) target range for the first time since February 2023. This marks the highest reading observed since the peak in April 2022 at 7.8%. The notable surge in vegetable prices and elevated inflation in other food categories such as cereals, pulses, spices, and milk have driven this increase. Notably, the contribution of food and beverages to the overall inflation has risen significantly to 65%, surpassing their weight in the CPI basket. Specifically, vegetables alone have contributed nearly 30% to the headline inflation figure, despite having only a 6% weight in the CPI basket. Encouragingly, the core inflation has moderated to 5.1% in July, down from 5.3% in June, thereby falling ...

India macro outlook (Gavekal Research) India’s economy is at an inflection point. The damage wrought by the pandemic still lingers, weighing on private-sector demand. But there are nascent signs that the government’s focus on investment spending is starting to pay off. Moreover, inflation is cooling more rapidly than anticipated, paving the way for policy to turn more supportive. These macro tailwinds, along with geopolitical currents, favor continued outperformance by Indian equities, despite their high valuations. By contrast, the rupee and Indian bonds are likely to remain anchored at current levels. GDP growth accelerated to 6.1% YoY in 1Q23, from 4.4% in 4Q22. The pick-up was largely driven by a sharp rise in investment, led by government spending on infrastructure. Growth in the fiscal year to March 31 (FY22-23) was 7.2%, a better-than-expected outcome, albeit slower than the 9.1% recorded in FY21-22. •       A combination of high public-sector spend...