Headline inflation low; core inflation rising
Kolkata: Leading ratings agency CRISIL Limited in its report said that headline inflation based on the CPI fell to 2.8 per cent in May, 2025, which is a good omen for the economy. According to CRISIL, a decline in food inflation is pulling down the headline retail inflation, but core inflation is edging up.
The core inflation basket in India includes all items in the CPI basket except for food and fuel. This typically includes items like: clothing and footwear; housing; household goods and services; health; education; transport and communication; personal care; and, recreation and entertainment.
Although remaining below the decadal trend, the core inflation has been now above four per cent for four months in a row. CRISIL said a persistent rise in core inflation can put pressure on headline inflation. According to the ratings firm, rising core inflation is indicative of strengthening domestic demand in the economy.
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We've moved away from heavy imports to building our own systems. Defence exports are rising, and there's global demand for Indian missiles and the only challenge is valuation; the defence index trades at a PE of 75. So, I'd recommend looking at this sector for the long term and using corrections as entry points. Other sectors:Negatively impacted by high crude:Airlines, Paints, Tyres: Crude is a key raw material. Downstream oil companies (like BPCL, Indian Oil), Margins get hit. Positively impacted: Upstream oil companies (like ONGC) benefit as selling prices rise. Pharma & IT: These are export-oriented. A weaker rupee makes them attractive. Pharma also remains defensive in crises. Q. The RBI recently cut repo rates by 50 bps, making it a 100 bps cut in 2025. Are banks and NBFCs back in focus? Dr. Jindal: Absolutely. The repo rate is now at 6.25%. This was a surprise — the market expected only a 25 bps cut. 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