Inflation spike illusory (distorted by food-grain weights), but could induce a hawkish policy response
CPI inflation spiked to 6.52% YoY in Jan’23, primarily because food & beverages inflation leapt to 6.12% YoY (from 4.52% YoY in Dec’22). The major culprit was the 16.12% YoY inflation in ‘Cereals & products’ (which account for 12.35% of the CPI). In Jan-Dec’23, over 800mn consumers are receiving subsidised rice and wheat through the public distribution system (PDS).