Thursday, May 15, 2014

April WPI to inch up to 5.72 percent: Poll

The CPI data is at a three-month high with the food inflation inching to 9.66 percent against 9.1 percent (MoM)
Key macroeconomic data including the consumer price inflation (CPI) data and the index of industrial production (IIP) numbers were released today post market hours.
 
The CPI-based inflation for the month of April came in at 8.59 percent, marginally higher than 8.31 percent a month ago. A CNBC-TV18 poll predicted 8.53 percent CPI data for April. The data is at a three-month high with the food inflation inching to 9.66 percent against 9.1 percent (MoM).
The rural inflation came in at 9.25 percent 8.89 percent, while the urban inflation was seen at 7.69 percent versus 7.51 percent (MoM) respectively. 
The combined core inflation data for April remains unchanged at 7.8 percent (MoM)
However, the March IIP brought in some respite by shrinking at a slower pace of -0.5 percent as against -1.8 percent in February. The poll had predicted -1.66 percent for the IIP data. The data has been revised to -1.8 percent from -1.9 percent for February.

The overall IIP data for FY14 came in at -0.1 percent versus 1.1 percent year-on-year.
What experts say
Experts believe the CPI data has been quite disappointing though the IIP number added some cheer.
Acording to Soumya Kanti Ghosh, Chief Economic Adviser, SBI, the core CPI that came in at 7.8 percent (MoM), is a pleasant surprise given that inflation has risen in April.
Sajjid Chinoy, Asia Economics, JPMorgan believes that at 7.8 percent, the momentum has changed quite a lot. However, the service sector growth has been muted and even without an EL Nino, which is expected to cause slowdown in monsoons, food inflation could remain really high. 
The basic goods growth, capital goods growth have been disappointing. However, only the consumer non-durable growth at 7.2 percent against -1.2 percent (MoM) is a positive and has led to the slower shrinkage of the IIP data, says Samiran Chakraborty, Head-Research, Standard Chartered Bank.

He believes the Reserve Bank of India will hold on interest rates on June 3 in order to evaluate the possible outcome of an EL Nino and whether that will result to a drought, inching inflation, food inflation in particular.
 Detailed breakup

March IIp at -0.5% consumer non-durables growth at 7.2% vs -1.2% (MoM) 

March IIP at -0.5% consumer durables growth at -11.8% vs -9.3% (MoM) 

March IIP at -0.5% consumer goods growth at -0.9% vs -4.5% (MoM) 

March IIP at -0.5% intermediate goods growth at 0.6% vs 4.2% (MoM) 

March IIP at -0.5% capital goods growth at -12.5% vs -17.4% (MoM) 

March IIP at -0.5% basic goods growth at 4% vs 3.9% (MoM) 

March IIP at -0.5% electricity sector growth at 5.4% vs 11.5% (MoM) 

March IIP at -0.5% nanufacturing sector growth at -1.2% vs -3.7% (MoM) 

March IIP at -0.5% mining sector growth at -0.4% vs 1.4% (MoM)

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