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Headline inflation to remain anchored within the RBI’s 2-6% target range Headline consumer price inflation fell to a 25-month low in May and is likely to remain within the RBI’s 2-6% target range for the foreseeable future. That means the tightening cycle …
12th June 2023
Indian manufacturing sector remains resilient India’s manufacturing PMI reading rose in May to a 31-month high and points to very healthy growth in the sector. But the survey also shows that price pressures are well past the peak, supporting our view …
1st June 2023
Growth likely to slow after Q1 rebound GDP data for Q1 (Q4 of FY22/23) show that India’s economy rebounded at the start of the year. But with higher interest rates still feeding through and fiscal policy turning slightly less supportive, growth is likely …
31st May 2023
Drop in wholesale inflation reinforces our view of no more rate hikes The drop in Indian wholesale price inflation in April, to a 33-month low, further reinforces our view that the central bank’s tightening cycle has come to an end. Headline wholesale …
15th May 2023
Sharp drop in headline inflation suggests no more rate hikes The sharp drop in headline consumer price inflation in April, to an 18-month low, supports our view that the central bank’s tightening cycle has come to an end. Headline CPI inflation fell from …
12th May 2023
PMI readings continue to be at odds with the hard activity data India’s manufacturing and services PMI readings rose in April but are at odds with the hard activity data that point to more subdued domestic and external demand. The composite PMI rose from …
3rd May 2023
Industry to continue facing headwinds Growth in India’s core infrastructure industries slowed in March, indicating that some of the resilience in the industrial sector at the start of the year may be fading. Domestic and external headwinds mean a …
28th April 2023
Headline CPI rate now likely to remain within target range The drop in headline consumer price inflation back to within the RBI’s 2-6% target range in March supports our view that the central bank’s hiking cycle has come to an end. Headline CPI inflation …
12th April 2023
Note: Join our 6th April online briefing all about the risks to EMs from banking turmoil. Register now . Strength of manufacturing PMI supports rate hike this week India’s manufacturing PMI reading edged up in March and points to healthy growth in the …
3rd April 2023
Drop in headline inflation not large enough to prevent April rate hike The slight drop in headline CPI inflation in February won’t have been enough to ease the concerns of the hawks on the MPC and, as a result, we now expect another 25bp hike to the repo …
13th March 2023
Industry to remain soft over the coming months Growth in industrial production picked up in January, supporting our view that Q4 will have marked the trough for q/q growth. Nevertheless, the outlook for the industrial sector over the coming months is …
10th March 2023
Manufacturing PMI likely to drop back further India’s manufacturing PMI reading edged down in February to a four-month low. We expect the reading to drop further over the coming months as both external and domestic demand soften. The manufacturing PMI …
1st March 2023
Economy coming off the boil GDP data for Q4 (Q3 of FY22/23) show that India’s economy came off the boil at the end of last year as higher interest rates weighed on household consumption and investment. But with the hawks still in the ascendancy within the …
28th February 2023
Chances of another rate hike have just risen The unexpectedly large jump in headline consumer price inflation in January to 6.5% y/y is a clear challenge to our view that the hiking cycle is at an end. Further signs of the economy coming off the boil and …
13th February 2023
Indian manufacturing remains resilient India’s manufacturing PMI showed signs of moderation in January after defying gravity for several months previously. It should drop further over the coming months as the economy comes off the boil. The manufacturing …
1st February 2023
Wholesale inflation drops for the sixth month in a row The drop in Indian wholesale price inflation for the sixth month in a row in December further reinforces our view that the MPC will draw the tightening cycle to a close after one more rate hike in its …
16th January 2023
Drop in headline inflation suggests end of tightening is imminent The further easing in headline CPI inflation in December to a 12-month low of 5.7% y/y supports our view that the tightening cycle is in its final throes. We expect just one more hike in …
12th January 2023
Strong PMI readings at odds with the hard activity data India’s manufacturing and services PMI readings rose to multi-month highs in December but are at odds with the hard activity data that point to a slowdown in domestic and external demand. India’s …
4th January 2023
Wholesale inflation drops to 21-month low The fall in Indian wholesale price inflation to a 21-month low in November chimes with the sharper-than-expected drop in headline consumer price inflation released earlier this week. We maintain our view that the …
14th December 2022
Sharp drop in headline inflation may hasten end of tightening The sharper-than-expected drop in headline CPI inflation in November (to 5.9% y/y) pulls it below the ceiling of the Reserve Bank’s 2-6% target range for the first time in almost a year. We …
12th December 2022
Indian manufacturing continues to buck the regional trend India’s manufacturing PMI edged up in November and continues to buck the weaker regional trend. The survey also indicates that price pressures are easing, reinforcing our view that the RBI is now …
1st December 2022
Economy holds up in Q3, but higher rates now taking a toll While base effects caused a sharp slowdown in headline GDP growth in India in Q3 (Q2 of FY22/23), growth held up well in quarter-on-quarter terms. However, there are signs in more timely activity …
30th November 2022
Prices pressures are moderating in earnest The substantial falls in both headline consumer and wholesale price inflation in October reinforce our view that the Reserve Bank will slow the pace of monetary tightening in its next scheduled policy meeting in …
14th November 2022
Industry rebounds, but headwinds growing Industrial production in India rebounded strongly in September, but we don’t expect this strength to last. Higher interest rates and the slowdown in global demand look set to weigh heavily on the sector over the …
11th November 2022
Manufacturing activity remains resilient India’s manufacturing sector appears to have bucked the weaker regional trend, with an increase in its PMI last month. There was nothing in today’s release to dissuade the RBI from further tightening. The …
1st November 2022
Wholesale inflation drops to 18-month low The fall in Indian wholesale price inflation to an 18-month low in September comes as welcome news following the stronger-than-expected consumer price data released earlier this week. And with headline CPI …
14th October 2022
Headline inflation rises, but now set to drop back The rise in headline consumer price inflation in September to further above the RBI’s 2-6% target range challenges our view that the RBI will slow the pace of tightening. But with food and energy …
12th October 2022
Economy holding up amid policy tightening India’s PMI readings moderated in September but the more important point is that they still indicate healthy growth in both manufacturing and services. The RBI will remain comfortable tightening policy over the …
6th October 2022
Rise in headline CPI rate should ensure another 50bp rate hike this month The rise in Indian CPI inflation in August to further above the RBI’s 2-6% target range should ensure that the central bank delivers another 50bp hike to the repo rate (to 5.90%) in …
12th September 2022
Manufacturing activity remains robust India’s manufacturing PMI moderated a touch in August but the more important point is that the reading is still consistent with robust growth in the sector. The RBI will remain comfortable tightening policy and we …
1st September 2022
Growth disappoints, but won’t derail policy tightening Base effects caused a surge in headline Indian GDP growth in Q2 (Q1 of FY22/23), but underlying growth slowed relative to Q1. As a result, GDP growth won’t reach 9% in 2022 as we had thought. That …
31st August 2022
Wholesale inflation trending down, but still elevated The fall in Indian wholesale price inflation in July reflects easing wholesale food inflation and lower commodity prices. But given both WPI and CPI inflation are still elevated, we think the RBI will …
16th August 2022
Inflation trending lower, but underlying price pressures still strong The bigger-than-expected drop in inflation in July is a challenge to our view that the MPC will hike the repo rate by 50bps again next month. But core inflation remains pretty strong, …
12th August 2022
Services coming off the boil, price pressures past their peak India’s July PMIs show a reversal of the recent outperformance of services. That said, both the services and composite PMIs remain high by pre-pandemic standards, pointing to growth continuing …
3rd August 2022
Domestic demand propping up manufacturing activity India’s manufacturing PMI was remarkably strong in July, with domestic demand supporting activity despite a negative global backdrop. The rebound will give the RBI more confidence to hike by 50bps this …
1st August 2022
Conditions continue to deteriorate in industry Favourable base effects kept y/y growth in India’s core infrastructure industries elevated in June. But once those base effects are removed, it’s clear that the industrial sector is entering a weaker phase. …
29th July 2022
WPI inflation has probably peaked Wholesale price inflation in India dropped back in June from its record high, and now appears to have passed its peak. CPI inflation will also peak in the next few months, but in the near term it’s still likely to rise …
14th July 2022
Inflation holds steady, but will climb again soon Headline consumer price inflation held steady in June, but the core rate rose further. We expect inflation to climb higher above the RBI’s target in July and August, which should be enough for the MPC to …
12th July 2022
Services sector booming India’s June PMIs show exceptionally strong activity in the services sector is offsetting slower growth in manufacturing. That may give the RBI some added confidence to continue frontloading policy tightening. India’s services PMI …
5th July 2022
Manufacturing slowing and tentative signs of inflation easing India’s manufacturing PMI dropped back in June, adding to the evidence of a slowdown in the broader industrial sector. Meanwhile although there are tentative signs of price pressures in the …
1st July 2022
Headline figures mask slowdown in output growth Base effects boosted y/y growth in India’s core infrastructure industries to a 13-month high in May. But stripping out base effects reveals that industry might be entering a softer patch after a strong few …
30th June 2022
WPI inflation suggests drop in CPI inflation will be short-lived Indian wholesale price inflation climbed to another historic high in May. The rise in food prices in particular suggests that some of the upside risks to the inflation picture we have been …
14th June 2022
Drop in inflation unlikely to last India’s consumer price inflation dropped back in May, but much of that was due to base effects. We expect inflation to resume rising from June, prompting the RBI to continue frontloading policy tightening. Headline CPI …
13th June 2022
Manufacturing performing well, but few signs of inflation easing India’s manufacturing PMI held steady in May, but there are further signs of price pressures becoming more intense last month. That supports our view that the RBI will frontload its policy …
1st June 2022
Economy well-placed for 2022, but downside risks growing Indian GDP data for Q1 (Q4 of FY21/22) show that activity held up much better during the Omicron outbreak than during previous virus waves. The economy is well-placed for strong growth over 2022 as …
31st May 2022
Inflation surges to eight-year high Headline consumer price inflation surged beyond even our above-consensus forecast to an eight-year high of 7.8% y/y in April. Given that it is likely to rise even higher over the coming months, further hikes to the repo …
12th May 2022
Activity robust, but price pressures intensifying India’s April PMIs show activity picking up, but power shortages may weigh on output soon. The surveys also provide more evidence of price pressures growing. That suggests the RBI will follow up …
5th May 2022
Core industries painting a mixed picture Growth in India’s core infrastructure industries slowed in March as production of some energy commodities fell. However, there are tentative signs that the rise in commodity prices caused by the war in Ukraine may …
29th April 2022
Inflation surges to 17-month high Headline consumer price inflation soared beyond even our above-consensus forecast in March and, given that it is likely to rise further over the coming months, we think the RBI will start hiking the benchmark repo rate …
12th April 2022
Omicron rebound continued, but inflationary risks growing India’s March PMIs show services as the bright spot last month as looser virus restrictions allowed activity to rebound. Unless COVID-19 cases pick up again, the outlook for the services sector …
6th April 2022