This higher number is primarily due to base effect, as vegetable inflation declined by 15 percent y-o-y.
As per the report, the M-o-M growth is expected to decline for December 2017.
The average for Q3 FY18 will come around 4.5 percent on a yearly basis compared to three percent in Q2 FY18. SBI expects the Q4 FY18 average at 4.8 percent.
Inflation for the January to June 2018 period is also likely to be on the higher side owing primarily to the base effect, as per the report.
The average inflation for January to June 2017 was at 2.89 percent.
The report further states that some inflation numbers in the first half of 2018 could print over 5.5 percent and this could be a source of negative surprise.
However, as CPI inflation was rising since July 2017, it will result in toned down inflation for July 2018 to December 2018 period, with some inflation prints even possibly slipping below four percent and hence a positive surprise.