Numbers for India’s industrial growth and inflation will be announced today. On the backdrop of a waning impact of the GST accompanied by increased commodity prices, the index of industrial production (IIP), wholesale price index and consumer price index are expected to increase, according to a report by global finance major Morgan Stanley and a poll of 36 economists by Reuters.
Data released by the government recently showed that retail inflation had reached 3.36 per cent, highest in the last five-month period. This was mostly on account of increased prices of vegetables and fruits. The financial services firm had predicted based on the upticking trajectory of inflation that the Reserve Bank of India would not change benchmark rates. In a monetary policy review meeting earlier this month, the central bank chose to keep key benchmark rates.
Morgan Stanley said that the IIP in August may improve as the impact due to GST would wane. It also expected growth in exports to remain strong in September as well as CPI inflation to go up to 3.8 per cent close to RBI’s target of 4 per cent. It also said that the WPI inflation would also see a 20 basis point increase in September to 3.4 per cent compared to 3.2 per cent in August. This metric would largely be based on increased prices of oil.
Morgan Stanley expects the IIP to rise to 1.7 per cent for the month of August. The report said that key indicators like production in core industries, passenger vehicle production and demand of steel remained supportive August indicating an improved IIP for the month.
“Looking ahead, we do expect that the economy should now have a clear runway for growth with both consumption and exports picking up,” the report said.
The numbers are expected to be released around 5:30 pm on Thursday. The retail inflation in India surged after major hike in salaries of Central government employees under the 7th Pay Commission. It was also helped by the GST impact, said the Reuters poll.
According to the poll, the projected growth of consumer inflation is a rise to 3.6 per cent in September. If the numbers to be released match the projection by the polled economists, inflation would be at its highest in the last six months–still below RBI’s 4 per cent mid-term target.
WPI are forecast to have increased to 3.41 per cent against 3.24 per cent in August. The poll also made a prediction of rise in industrial production to 2.4 per cent in August up from 1.2 per cent the previous month.