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India’s inflation receding after surge during lockdown Inflation in India appears to be easing after an initial surge when the lockdown first came into effect. We expect headline inflation to continue falling towards the RBI’s 4% target, which should …
13th July 2020
Economic recovery underway but set to remain lacklustre The rebound in June’s services and composite PMIs suggests the economy is now on the long road to normality. But the recovery will be slow and fitful . India’s services PMI rose from 12.6 in May to …
3rd July 2020
Activity picking up but recovery will be protracted Despite remaining below 50, the rise in June’s manufacturing PMI reading suggests to us that activity has picked up further as containment measures have been scaled back. However, the lasting damage …
1st July 2020
Industrial recovery will be slow and protracted The contraction in India’s core infrastructure industries index eased a little in May, suggesting that the slump in industry has bottomed out. But activity is still very weak and, given the damage that has …
30th June 2020
Inflation not a constraint on policy action Wholesale price inflation data for May show a broad-based easing in price pressures. This reinforces our view that inflation shouldn’t be a barrier to further policy loosening, and we expect the RBI to further …
15th June 2020
Lockdown severely curtails monthly data This Data Response was originally sent to clients as a Rapid Response on Friday 12 th June 2020. As a result of the Statistics Office being only partly operational due to India’s nationwide lockdown, the headline …
12th June 2020
Services past the worst, but recovery will be lacklustre Interpreting the PMI surveys in the current environment is tricky, but the small rise in May’s services PMI suggests to us that activity has edged up very slightly. Nevertheless, fears over …
3rd June 2020
Activity edges up but substantial recovery is a long way off The nature of the PMI surveys makes them tricky to interpret in the current environment, but we think May’s manufacturing reading indicates that activity in the sector edged up slightly last …
1st June 2020
Relative resilience won’t last According to the official GDP data, India’s economy held up rather well in Q1 as a whole given that a stringent lockdown was imposed in the second half of March. But the data are increasingly subject to significant revisions …
29th May 2020
Inflation not a constraint on policy action The partial release of the WPI inflation figures for April strongly suggest that the headline rate has dropped. This supports our view that the inflation outlook shouldn’t be a concern for policymakers, whose …
14th May 2020
Inflation locked down, worse still to come for industry This Data Response was originally sent to clients as a Rapid Response on 12 th May 2020. As a result of the Statistics Office being only partly operational due to India’s nationwide lockdown, the …
13th May 2020
Services faring far worse than manufacturing The extraordinary plunge in the services PMI highlights that services is faring far worse than the manufacturing sector in the current crisis. Looking ahead, the services sector is likely to suffer for longer. …
6th May 2020
Manufacturing PMI plunges to record low The astounding plunge in India’s manufacturing PMI to a record low in April strongly indicates that the nationwide lockdown has caused activity to collapse. Looking ahead, with the shutdown now extended for another …
4th May 2020
Industrial activity to remain in the doldrums India’s core infrastructure industries index contracted sharply in March, suggesting that overall industrial output will have fallen by a similar magnitude. The lockdown only began towards the end of the …
30th April 2020
Inflation not a concern for policymakers Although not the preferred measure for policymakers, the drop in the headline WPI rate in March reinforces our view that inflation is no concern at this stage. Instead, the priority now is for the central …
15th April 2020
Inflation no concern for policymakers Headline CPI inflation dropped to a four-month low in March and timely indicators suggest a further easing in price pressures so far in April. With inflation no concern, the priority for policymakers is to loosen …
13th April 2020
Far worse is yet to come The drop in the PMI readings for March suggests that the economy had already lost momentum even before the nationwide lockdown was imposed towards the end of the month. More timely indicators suggest that activity has now ground …
6th April 2020
Worst is yet to come India’s manufacturing PMI dropped to a four-month low in March and the reading has yet to capture the impact of the nationwide lockdown which began at the end of the month. April’s reading, and possibly beyond, will be far worse. …
2nd April 2020
Drop in WPI inflation increases rate cut chances amid virus threat The drop in wholesale price inflation in February is an added source of comfort for the RBI following the fall in CPI inflation last month. We think it will follow its global peers by …
16th March 2020
Drop in headline inflation sets scene for renewed policy rate cuts February’s drop in consumer price inflation leaves the headline rate still well above target. But inflation is likely to fall further. In any case, with coronavirus risks mounting, the …
12th March 2020
Local manufacturing relatively unscathed from coronavirus outbreak The drop in the manufacturing PMI in February was expected given its previous surge to an eight-year high in January. But the reading is still consistent with decent growth in …
2nd March 2020
Broad data revisions suggest economy weak for longer India’s economy slowed again in the fourth quarter of last year, confounding hopes for a small turnaround. But the bigger story in today’s data release is the substantial revision to the GDP data for …
28th February 2020
Underlying price pressures are building The RBI doesn’t put much weight on the wholesale price measure of inflation, but the pick-up in core WPI inflation supports our view that the room for further monetary easing has diminished. Headline WPI inflation …
14th February 2020
Rise in core inflation likely to continue Inflation rose faster than most expected in January due to a jump in core inflation. With an economic recovery around the corner, underlying price pressures should strengthen further over the coming quarters. That …
12th February 2020
Manufacturing PMI has probably peaked India’s manufacturing PMI surged in January to an eight-year high and defied the trend across the rest of Asia. Though the reading may fall back as fears over the coronavirus dents sentiment, the big picture is that …
3rd February 2020
Headline WPI jumps to highest in seven months The RBI doesn’t put much weight on the wholesale price measure of inflation, but the fact that it accelerated to a seven-month high in December nevertheless supports our view that the rate-cutting cycle is now …
14th January 2020
Surge in headline inflation to five-year high brings easing cycle to an end The jump in headline CPI inflation to its highest since 2014 almost guarantees that the RBI will leave policy rates on hold at its next meeting in early February. And with core …
13th January 2020
Industrial downturn has probably run its course The sharper-than-expected turnaround in industrial production growth in November is a breath of fresh air for India’s economy and supports our view that the economic slowdown has probably bottomed out. We …
10th January 2020
Jump in manufacturing PMI reduces chance of further rate cuts The jump in India’s manufacturing PMI in December suggests that the manufacturing sector has recovered from its weakness last year and supports our view that the recent economic slowdown has …
2nd January 2020
Headline WPI inflation rebounds Headline wholesale price inflation rose for the first time in eight months in November. While not the preferred measure of inflation for India’s policymakers, this adds to the impression that the inflation backdrop is …
16th December 2019
Surge in headline inflation could leave MPC on hold once more The further surge in headline inflation in November casts doubt on the possibility of further monetary easing. If the headline rate remains high above the central bank’s 4.0% target this month …
12th December 2019
Rise in manufacturing PMI an early signal of a recovery We wouldn’t read too much into the rebound in India’s manufacturing PMI in November but, with policy stimulus already in the pipeline, we think that the prospects for local manufacturers will improve …
2nd December 2019
Weak economic growth guarantees a rate cut India’s economy slowed further in Q3 and, with a strong rebound in the near term looking unlikely, there is a rising chance that the rate cut that is almost certain next week will be followed by another in …
29th November 2019
Headline WPI inflation drops to 40-month low Wholesale price inflation is not the preferred measure of inflation for India’s policymakers, but the fact that the headline rate dropped to a 40-month low in October won’t go unnoticed. Another rate cut in …
14th November 2019
Inflation above-target for first time since mid-2018 The first above-target inflation reading since July last year should not push the Reserve Bank of India off its rate-cutting course. While the headline figure is being driven by a spike in food prices …
13th November 2019
Gloom in industry deepens The downturn in India’s industrial production deepened in September with the result that, on this measure, industry contracted slightly across Q3 as a whole. More policy easing is likely in order to turn the economy around. Data …
11th November 2019
Drop in manufacturing PMI should reverse soon The drop in the manufacturing PMI in October to a two-year low is a worrying sign that business conditions have further deteriorated. But with fiscal policy being loosened and further monetary easing still on …
1st November 2019
Surge in headline inflation won’t worry the RBI yet The jump in headline consumer price inflation in September won’t prevent another policy rate cut from the Reserve Bank, particularly since it was largely due to damage to farmers’ harvests rather than …
14th October 2019
Persistently weak WPI inflation raises likelihood of another rate cut The weakness in wholesale price inflation in September is likely to persist until the end of the year and, although not the preferred measure of inflation for India’s policymakers, …
Slump in output should be temporary The contraction in India’s industrial production in August is alarming but it should prove temporary as the effect of recent policy easing kicks in. Data just released show that industrial production growth turned …
11th October 2019
PMI reading hasn’t yet reflected corporate tax cut boost The manufacturing PMI reading held steady in September, but this barely captured the impact of the recent large-scale corporate tax cut. Looser fiscal policy and the likelihood of further monetary …
1st October 2019
Rate cut almost certain as WPI inflation remains weak Wholesale price inflation is not the preferred measure of inflation for India’s policymakers but even so, the continued weakness in the headline rate in August increases the likelihood of another rate …
16th September 2019
Another rate cut likely with inflation holding steady Headline consumer price inflation held steady in August and remained comfortably below the RBI’s target of 4.0%. This is the last set of CPI data that will be released before the MPC next meets in …
12th September 2019
PMI readings paint healthier picture for manufacturing than GDP data Despite dropping in August, the recent manufacturing PMI readings paint a healthier picture of the sector than the Q2 GDP data released last week. That said, they won’t provide a hurdle …
2nd September 2019
More weakness in Q2 Another unexpectedly weak quarter of growth in India strengthens the case for further easing of fiscal and monetary policy. We expect both over the rest of this year. GDP growth slowed from 5.8% y/y in Q1 to 5.0% in Q2. This was the …
30th August 2019
Rebound in WPI inflation still on the cards Wholesale price inflation is not the preferred measure of inflation for India’s policymakers but even so, the weakness in the headline rate in July increases the likelihood of another rate cut at the RBI’s next …
14th August 2019
More rate cuts on the way despite rise in core inflation Headline inflation held steady in July and remains comfortably below the central bank’s (RBI) 4.0% target, laying the foundations for at least one more interest rate cut later this year. But with …
13th August 2019
A better Q2 than Q1 Indian industrial production growth slowed in June, but the sector performed much better across Q2 compared to Q1. Looking ahead, recent policy moves should help to support local industry over the next couple of quarters. Data just …
9th August 2019
Two-year manufacturing expansion won’t stop a rate cut India’s manufacturing PMI reading for July is consistent with decent output in the sector at the start of Q3. But this won’t be a barrier to further monetary easing, and we’ve pencilled in another …
1st August 2019
Falling WPI inflation raises likelihood of another rate cut The wholesale price index is not the preferred measure of inflation for India’s policymakers, but the continued decline in the headline rate in June will help the MPC to justify another rate cut …
15th July 2019