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Data Preview-September CPI/WPI Inflation; August IIP -
Data Preview-September CPI/WPI Inflation; August IIP
Nirmal Bang | Published: 11 Oct, 2017  | Source :

September  2017  Consumer  Price  Index  or  CPI  inflation  is  likely  to  come  in  at  3.45%  YoY,  a  tad higher than  3.36% in  the previous month.  Fruit and vegetable prices,  among the primary drivers of  inflation in the past two months ,  have  witnessed  some  moderation, but the  rise in  fuel  prices and  pick-up  in  core  inflation  should  push  headline  inflation  slightly  higher. 

Core  inflation  (inflation  excluding food and fuel, but including petrol)  is expected to rise to 5.0% from 4.5% in the previous month, partially on account of higher housing inflation ,  reflecting the  hike  in house rent allowance (HRA) recommended by the Seventh Central Pay Commission (7th CPC)  and also because of higher petrol  prices  and  price  adjustments  post  implementation  of  Goods  and  Service  Tax  or  GST. Wholesale  Price  Index  or  WPI  inflation  is  also  likely  to  witness  a  slight  moderation  to  3.1%  in September  2017 from  3.2% in the previous month  on account  of correction  in the prices of fruits  and vegetables. 

However,  core  WPI  inflation is likely to rise to 1.8% YoY from 1.7% in the previous month  as  past  increases  in  commodity  prices  and  rise  in  fuel  prices  exert  upward  pressure  on manufacturing costs.  The Index of industrial Production or IIP is likely to come in at  3.5% YoY for August  2017, up from 1.2% in  the previous month. 

We do not see  much  room for monetary policy accommodation,  with inflation now on a rising trajectory.  Incoming data also suggests that growth is bottoming out, although the recovery is likely to be slow and uneven. However, should growth or inflation  surprise  significantly  on  the  downside, the  Reserve  Bank  of  India  or  RBI  may  signal  its growth-supportive stance with a 25bps cut in key rates.

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Founded in 1986 by Nirmal Bang, the Nirmal Bang is recognized as one of the largest retail broking houses in India, providing an array of financial products and services. Their retail and institutional clients have access to products such as equities, derivatives, commodities, currency derivatives, mutual funds, IPOs, insurance, depository services and PMS. The Group is headed by Mr. Dilip Bang and Mr. Kishore Bang.

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Disclaimer: The author has taken due care and caution to compile and analyse the data. The opinions expressed above are only the views of the author, and not a recommendation to buy or sell. Neither the author nor accept any liability whatsoever arising from the use of any of the above contents.