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April's headline WPI of 8.7% was a bit above market expectations of 8.5%, but in line with the
Reserve Bank's forecast of 9%. Yoy core manufacturing product inflation was 6.3%, down from
the 7.4% reading for March.
April headline yoy WPI of 8.7% vs. Bloomberg consensus of 8.5%
Yoy WPI inflation moderated from the revised 9.1% reading for March. The Reserve Bank,
per its monetary policy statement on 3 May, had forecast yoy WPI inflation to stay close to 9%
through September.
February inflation numbers revised upward
February yoy WPI inflation was revised up to 9.5% from 8.3%, linked to the upward revision in
yoy core manufactured products inflation to 7.6% from 6.1%.
Separately, the WPI series was also revised from April 2004 onwards to correct an error in
the series. The WPI data released earlier did not incorporate the WPI for Metal Products. As a
result, the yoy WPI inflation reading for March was revised to 9.04% from 8.98%, and the yoy
core manufactured products inflation reading was revised to 7.35% from 7.01%.
Core manufacturing inflation trends down on a yoy and sa mom basis
Yoy core manufacturing inflation (excluding food products) reached 6.3% in April, down from
a revised 7.4% in March. On a seasonally adjusted (sa) basis, the core manufacturing price
index declined nine basis points from March. On a non-seasonally adjusted basis, the index
increased 1.2% mom.
Given the significant upward revisions in the February data, we think it may be too early to
predict a downtrend in core inflation. We think yoy core inflation could again climb north of 7%
by July due to the pass through impact of expected retail fuel price hikes.
However, yoy food inflation ticked up in April
Total food inflation (primary and manufactured) increased to 7.6% from 6.8% in March driven
by the increase in manufactured food inflation to 5.7% from 2.4%. Primary food articles yoy
inflation moderated to 8.7% in April from 9.5% in March.
RBI's conservative inflation forecast reduces the risk of an inflation surprise
The Reserve Bank, per its monetary policy statement on 3 May, expects yoy WPI inflation to
stay close to 9% through September, and gradually moderate to 6% (with an upward bias) by
March 2012. This implies an average WPI inflation rate of 8.1% for FY12.
Our calculations suggest a similar trajectory, with some upside risk on headline inflation. As
such, we think the risk of inflation being significantly higher than the RBI's forecasts is
relatively limited.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
April's headline WPI of 8.7% was a bit above market expectations of 8.5%, but in line with the
Reserve Bank's forecast of 9%. Yoy core manufacturing product inflation was 6.3%, down from
the 7.4% reading for March.
April headline yoy WPI of 8.7% vs. Bloomberg consensus of 8.5%
Yoy WPI inflation moderated from the revised 9.1% reading for March. The Reserve Bank,
per its monetary policy statement on 3 May, had forecast yoy WPI inflation to stay close to 9%
through September.
February inflation numbers revised upward
February yoy WPI inflation was revised up to 9.5% from 8.3%, linked to the upward revision in
yoy core manufactured products inflation to 7.6% from 6.1%.
Separately, the WPI series was also revised from April 2004 onwards to correct an error in
the series. The WPI data released earlier did not incorporate the WPI for Metal Products. As a
result, the yoy WPI inflation reading for March was revised to 9.04% from 8.98%, and the yoy
core manufactured products inflation reading was revised to 7.35% from 7.01%.
Core manufacturing inflation trends down on a yoy and sa mom basis
Yoy core manufacturing inflation (excluding food products) reached 6.3% in April, down from
a revised 7.4% in March. On a seasonally adjusted (sa) basis, the core manufacturing price
index declined nine basis points from March. On a non-seasonally adjusted basis, the index
increased 1.2% mom.
Given the significant upward revisions in the February data, we think it may be too early to
predict a downtrend in core inflation. We think yoy core inflation could again climb north of 7%
by July due to the pass through impact of expected retail fuel price hikes.
However, yoy food inflation ticked up in April
Total food inflation (primary and manufactured) increased to 7.6% from 6.8% in March driven
by the increase in manufactured food inflation to 5.7% from 2.4%. Primary food articles yoy
inflation moderated to 8.7% in April from 9.5% in March.
RBI's conservative inflation forecast reduces the risk of an inflation surprise
The Reserve Bank, per its monetary policy statement on 3 May, expects yoy WPI inflation to
stay close to 9% through September, and gradually moderate to 6% (with an upward bias) by
March 2012. This implies an average WPI inflation rate of 8.1% for FY12.
Our calculations suggest a similar trajectory, with some upside risk on headline inflation. As
such, we think the risk of inflation being significantly higher than the RBI's forecasts is
relatively limited.
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