Inflation to fall back only gradually

We now expect CPI inflation to fall back to the 6% ceiling of the RBI's target range by the end of the year as food and energy inflation drags the headline rate lower. But beyond that, we still expect inflation to fall back only gradually, primarily because we think underlying price pressures will remain fairly strong. Accordingly, we still think the RBI's hiking cycle has further to run, and we are penciling in another 50bp hike to the repo rate in September.