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WPI for September 2011 at 9.72%
WPI for September 2011 came in at 9.72%, down by 6bp compared to the inflation figure
last month. The latest reading was slightly below the median forecast (9.75%) of
Bloomberg’s survey of economists. Core (non-food manufacturing) inflation – which the
RBI tracks closely – eased to a four-month low of 7.5% (7.8% in August 2011).
Primary articles inflation came in at 11.8%, ~7bp lower than the 12.6% hit in August
2011. Food articles inflation came in at above 9% (9.2%), while non-food articles inflation
(14.8%) dropped below 15% for the first time in the last 16 months. Inflation for minerals
continued to be high at 24.8%. Fuel and power inflation rose sharply to 14.1%, reaching
its 16-month high, from 12.8% in August 2011.
Manufactured products, which have a weightage of ~65% in overall WPI, continued to be
high at 7.7% (average of 6.5% over last year). Manufacturing articles inflation was driven
by higher prices of beverages, tobacco, chemicals, metals and food products. The spread
between primary articles and manufactured products inflation, which was as high as
13.1% in January 2011, remained lower at 4.1% (4.8% in August 2011).
Inflation figures came in-line with street’s consensus and, thus, had already been factored
in by the markets. Although inflation figures continued to be high, both primary articles
and manufactured products inflation witnessed a marginal fall compared to last month.
Fuel and power inflation rose sharply for September, however declining global demand is
expected to keep commodity and energy prices soft going ahead.
Taking into account our forecasted inflation trajectory and the RBI's unequivocal guidance
(that in the near term, unless inflation trajectory shows a downward trend, its stance will
not change), we do not rule out further rate hikes in CY2011. However, from January
2012, we believe inflation is likely to start trending downwards, barring any major
negative surprises on the global commodity price front. In fact, rising global growth
concerns and the consequent weaker demand prospects along with declining fiscal
stimulus measures in developed economies are likely to keep commodity and energy prices
in check in the short term.
Hence, from January 2012 at the latest, we see a meaningful case for the RBI to take a
pause, especially considering the signs of slowdown on the domestic growth front, evident
from slowing GDP growth rates, tepid IIP growth, moderating trend in PMI, declining
vehicle sales and expected moderation in export growth.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
WPI for September 2011 at 9.72%
WPI for September 2011 came in at 9.72%, down by 6bp compared to the inflation figure
last month. The latest reading was slightly below the median forecast (9.75%) of
Bloomberg’s survey of economists. Core (non-food manufacturing) inflation – which the
RBI tracks closely – eased to a four-month low of 7.5% (7.8% in August 2011).
Primary articles inflation came in at 11.8%, ~7bp lower than the 12.6% hit in August
2011. Food articles inflation came in at above 9% (9.2%), while non-food articles inflation
(14.8%) dropped below 15% for the first time in the last 16 months. Inflation for minerals
continued to be high at 24.8%. Fuel and power inflation rose sharply to 14.1%, reaching
its 16-month high, from 12.8% in August 2011.
Manufactured products, which have a weightage of ~65% in overall WPI, continued to be
high at 7.7% (average of 6.5% over last year). Manufacturing articles inflation was driven
by higher prices of beverages, tobacco, chemicals, metals and food products. The spread
between primary articles and manufactured products inflation, which was as high as
13.1% in January 2011, remained lower at 4.1% (4.8% in August 2011).
Inflation figures came in-line with street’s consensus and, thus, had already been factored
in by the markets. Although inflation figures continued to be high, both primary articles
and manufactured products inflation witnessed a marginal fall compared to last month.
Fuel and power inflation rose sharply for September, however declining global demand is
expected to keep commodity and energy prices soft going ahead.
Taking into account our forecasted inflation trajectory and the RBI's unequivocal guidance
(that in the near term, unless inflation trajectory shows a downward trend, its stance will
not change), we do not rule out further rate hikes in CY2011. However, from January
2012, we believe inflation is likely to start trending downwards, barring any major
negative surprises on the global commodity price front. In fact, rising global growth
concerns and the consequent weaker demand prospects along with declining fiscal
stimulus measures in developed economies are likely to keep commodity and energy prices
in check in the short term.
Hence, from January 2012 at the latest, we see a meaningful case for the RBI to take a
pause, especially considering the signs of slowdown on the domestic growth front, evident
from slowing GDP growth rates, tepid IIP growth, moderating trend in PMI, declining
vehicle sales and expected moderation in export growth.
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