Prices have continued to move up in Delhi's markets, wholesale and retail, on supply worries and spoilage due to record cold weather.
Former finance minister P Chidambaram on Friday rejected Finance Minister Arun Jaitley's contention in Lok Sabha that UPA government left behind double digit inflation.
Days before Diwali, the monthly economic review by the finance ministry has highlighted moderation in urban demand, softening consumer sentiments and limited footfall as areas that need to be watched. In its review, released on Monday, the ministry also noted the early signs of artificial intelligence displacing workers, as described in anecdotal reports. The commentary from several large consumer goods companies, including Nestl India, Hindustan Unilever, and ITC, in their recent quarterly earnings, has been around a sluggish urban demand. Rural consumption, however, has mostly seen a revival, the companies pointed out.
Prospects of China hiking interest rates increased as inflation rose to 3.1 per cent in May, surpassing the government target of 3 per cent.
'While intensification of fuel prices and broad-based domestic cost pass-through pressures is a downside risk, core inflation is expected to strengthen further as demand recovers to pre-Covid levels,' the ministry said on Friday.
Experts believe equities and debt will continue to do well.
Subdued prices of food items like vegetables pulled down retail inflation for the third month in a row to 5.3 per cent in August, within the RBI's comfort zone. While the Consumer Price Index (CPI)-based retail inflation declined to 5.3 per cent in August from 6.69 per cent in the same month a year ago, food inflation dipped at a much faster pace to 3.11 per cent from 9.05 per cent in August 2020. The food inflation was also lower than 3.96 per cent in preceding month of July.
Finance Minister Nirmala Sitharaman on Thursday said India has ramped up the import of crude oil from Russia at discounted prices amid sanctions on Moscow as part of the country's inflation management. "In a situation where global prices were going beyond anyone's affordability, at that stage to take a very strong political decision, I respect the prime minister for his courage on this to get it from Russia because they are ready to give it to you at discount. And how speedily did we manage to do it," she said. India ramped up its import from Russia from about 2 per cent of the total shipment of petroleum products to 12-13 per cent in a couple of months as part of inflation management, she said at a seminar organised by economic think-tank Icrier.
"We have to stand in readiness to go beyond keeping Arjuna's eye to deploying policy instruments, if necessary" to contain inflation, said Reserve Bank Governor Shaktikanta Das on Thursday. Headline consumer price index-based inflation projection for the second quarter of 2023-24 has been revised up substantially, primarily due to the price shock from vegetables, at 6.2 per cent by the RBI form 5.2 per cent estimated in June. Unveiling the bi-monthly monetary policy, Governor Das said the moderation in headline inflation to 4.6 per cent in the first quarter of 2023-24 was in line with the projections set out in the June MPC meeting.
Reserve Bank Governor Shaktikanta Das on Wednesday said the decision to tweak policy rates was not in his hand as he himself is driven by the situation on the ground. In April, the Reserve Bank in a surprise move hit the pause button and decided to keep the key benchmark policy rate at 6.5 per cent. Prior to it, the Reserve Bank of India (RBI) was on a rate hiking spree, raising the repo rate by 250 basis points since May 2022.
The wholesale price-based inflation rose to 2.03 per cent in January, 2021, even as food prices cooled. The WPI inflation was 1.22 per cent in December, 2020 and 3.52 per cent in January last year. While food articles saw softening in inflation in January, manufactured items witnessed hardening of prices, as per data released by the Commerce and Industry ministry.
In twin blows to Indian economic revival, higher food prices drove retail inflation to a five-month high of 7.4 per cent while factory output fell for the first time in 18 months. The second consecutive month of rise in consumer price index (CPI)-based inflation will add to the pressure on the Reserve Bank of India (RBI) to again raise interest rates to tame high prices. Inflation has been above the targeted zone for the ninth month in a row and as per statute, the RBI will now have to explain to the government in writing why it failed to keep prices below 6 per cent.
Power Grid, HCL Technologies, Asian Paints, Hindustan Unilever, Maruti and Nestle were among the laggards. Shares of HCL Technologies were trading over 1 per cent lower even after the company reported a 7.6 per cent year-on-year rise in June quarter net profit on the back of new order wins.
Gold prices rallied Rs 910 to hit a fresh all-time high of Rs 83,750 per 10 grams in the national capital on Wednesday due to heavy buying from jewellers and retailers, according to the All India Sarafa Association. The precious metal of 99.9 per cent purity had settled at Rs 82,840 per 10 grams in the previous trading session.
India's manufacturing sector growth fell to a joint 11-month low of 56.5 in November, restricted by competitive conditions and inflationary pressures amid a softer increase in factory orders, a monthly survey said on Monday. The seasonally adjusted HSBC India Manufacturing Purchasing Managers' Index (PMI) fell from 57.5 in October to 56.5 in November, signalling a softer improvement in the health of the sector. However, the pace of growth remained above its long-run average.
'A 10 to 15 per cent allocation to gold in portfolios reduces risk without compromising on potential returns.'
The rate of price rise has been on a decline for the past four months.
The wholesale price-based inflation shot up to an all-time high of 10.49 per cent in April, on rising prices of crude oil and manufactured items. Also, a low base of April last year contributed to the spike in inflation in April 2021. The WPI inflation was 7.39 per cent in March 2021, and (-) 1.57 per cent in April 2020. This is the fourth straight month of uptick seen in the wholesale price index (WPI)-based inflation.
'Even if India is attractive, FPIs currently lack the funds to invest, as money is being redirected to the US.'
From the 30-share pack, Hindustan Unilever, Tata Motors, Axis Bank, Nestle India, Asian Paints, ITC, Reliance Industries, Mahindra & Mahindra, IndusInd Bank and State Bank of India were among the laggards. Larsen & Toubro, Tata Steel, JSW Steel, HDFC Bank, Adani Ports, Kotak Mahindra Bank, Bharti Airtel and PowerGrid were among the gainers.
The government's step could push investors to choose riskier equity, or to fall back on bank deposits, thereby negatively impacting the debt market which actually needs to grow, points out T N Ninan.
A careful reading of the national income accounts suggests that after a strong recovery from the pandemic, there has been a significant ebbing of dynamism over the last three quarters to more modest levels recently, note Arvind Subramanian and Josh Felman.
India's consumer price index (CPI)-based inflation could ease in the coming months thanks to the arrival of kharif crops, lower international commodity prices, and a pass through of lower input costs to consumers, the finance ministry said in its Monthly Economic Review (MER) for October, which was released on Thursday. The MER, however, warned that the global macroeconomic situation remained precarious and a recession in many advanced economies would impact India's exports. "Easing international commodity prices and new Kharif arrival are set to dampen inflationary pressures in the coming months.
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Food prices for consumers also eased to an annual 11.06 percent in August from 11.24 per cent in July.
Benchmark 10-year bond yields hit a 13-month peak as bond traders priced in more aggressive monetary easing next year.
India's manufacturing sector growth recovered from September's eight-month low to 57.5 in October fuelled by faster increases in total new orders and international sales, a monthly survey said on Monday. The seasonally adjusted HSBC India Manufacturing Purchasing Managers' Index (PMI) rose from September's eight-month low of 56.5 to 57.5 in October, indicating a substantial and accelerated improvement in operating conditions.
The rupee depreciated by 37 paise to close at 79.62 against the US dollar on Thursday despite sustained foreign capital inflows and a positive trend in equities. At the interbank foreign exchange market, the local currency opened at 79.22 and saw an intra-day high of 79.22 and a low of 79.94 against the American currency. It finally ended at 79.62, down 37 paise over its previous close of 79.25.
According to the global financial services major, the Consumer Price Index based inflation is peaking off and is expected to be around 7.5-8 per cent in September.
The festive season will mean business for the steel industry as it is the time when automotive and consumer appliance companies bump up demand to prepare for higher sales, experts have said. Ranjan Dhar, chief marketing officer at ArcelorMittal Nippon Steel India (AM/NS India), said that bookings by auto and consumer appliance industries are 20 per cent higher ahead of the festive season compared to last year. "While this could be for a couple of months, it could normalise later at approximately 10 per cent," he said.
Citing the sharp rise in food prices, economists at a foreign bank have forecast a steeply higher retail inflation print for July, pegging it at 6.7 per cent, up 190 basis points from the previous month. Deutsche Bank India economists led by chief economist Kaushik Das, in a report on Monday ahead of the monthly inflation print and the Reserve Bank's monetary policy review, said that the July consumer price-based inflation index (CPI) is likely to print at 6.7 per cent on-year as against 4.8 per cent in June. The Reserve Bank is widely believed to leave the key interest rates unchanged for the fourth time in its upcoming bi-monthly monetary policy decision on August 10.
Finance Minister Nirmala Sitharaman on Wednesday said the country's economic growth remains a priority for the government, as inflation has come down to a manageable level. Job creation and equitable distribution of wealth remain the other focus areas, she said at India Ideas Summit. "Some of course are red-lettered (priorities), some may not be. Red-lettered ones would of course be jobs, equitable wealth distribution and making sure India is moving on the path of growth.
The Boston Analytics Consumer Sentiment Index for August fell below the benchmark value of 100 since its inception, signalling a low-key festive season ahead.
IIP, inflation numbers bring cheer, but their sustainability is the key.
Consider a combination of a base policy and a super top-up policy.
The 30-share Sensex ended 209 points down at 20,282 after hitting an intra-day low of 20,262 and the 50-share Nifty ended 61 points down at 6,018 after touching an intra-day low of 6,012.
The broader markets too ended weak- BSE Midcap and Smallcap indices fell by nearly 1% each.
Retail inflation, based on Consumer Price Index, was at 10.36 per cent in May.
'If rate cuts happen, bond yields will come down and investors will make mark-to-market capital gains on them.'
In January, consumer price index-based inflation rose for the fourth consecutive month. It stood at 10.78 per cent, against 10.56 per cent in December.
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Declining prices of food items like vegetables pulled down retail inflation to 5.59 per cent in July, bringing it back within the RBI's comfort zone after two months, official data showed on Thursday. The retail inflation based on the Consumer Price Index (CPI) had remained above 6 per cent during May and June. The government has mandated the RBI to maintain retail inflation at 4 per cent, with a margin of 2 per cent on either side. The CPI based inflation stood at 6.26 per cent in June 2021 and 6.73 per cent in July 2020.
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