Dec CPI Print In Focus Tomorrow

Tomorrow delivers Dec CPI data. The market consensus is for an unchanged outcome (5.89% y/y, 5.88% in Nov, the range of forecasts is 5.86%-6.02%). The inflation trajectory shapes as key in determining the RBI outlook. Below some sell-side expectations previewing tomorrow's outcome are summarized.

• Goldman Sachs: We expect CPI inflation to decrease to 5.8% yoy in December (BBG consensus: 5.8% yoy, November: 5.9% yoy). Sequentially, we estimate food prices to have decreased 1.2% mom nsa in December driven mainly by a sharp decline in vegetable and fruit prices. On a year-over-year basis, we expect food inflation to ease to 4.8% yoy from 5.1% yoy in November. We estimate RBI core inflation (headline excluding food and fuel inflation) to increase to 6.3% yoy driven by increase in gold and silver prices.
• Morgan Stanley: We expect CPI inflation to moderate a tad to 5.8%Y in December from 5.9% in November, following a moderation in food prices even as fuel and core CPI remain sticky. On a sequential basis, however, we anticipate the deceleration in headline CPI will be driven by softening food and fuel prices.
• Nomura: We expect CPI inflation to moderate to 5.7% y-o-y in December from 5.9% in
  November, due to base effects, with a 0.4% m-o-m (sa) increase in sequential
  momentum, after a 0.1% decline in November. Food & beverage inflation is likely to
  moderate to 4.8% y-o-y from 5.1% in November, primarily driven by another sharp
  correction in vegetable prices. Core inflation is likely to moderate marginally to 5.9% y-o-y in December from 6.0% in November, with sequential momentum easing to 0.35% m-o-m (sa) from 0.54% on average over the past three months, underpinned by expectations of a moderation in the pass through of higher input costs to firms.
• SocGen: India’s December CPI likely moved up beyond 6.0% to touch 6.1% yoy from the 5.9% print in November, as the statistical base turned adverse. After a brief monthly disinflation in November, the retail price index likely rose again on a month-on-month basis. For December, we expect core inflation to move up further to around 6.9%, suggesting persistent price pressure and implying that the journey toward RBI’s median target of 4.0% will be long and arduous.