Posted at 2:41 PM , on December 5, 2016
The core sector number for the month of October 2016 was announced by the Department of Economic Affairs on 30th November. The core sector consists of 8 key sectors that form the backbone of the economy and include; Steel, Cement Fertilizers, Crude Oil, Natural Gas, Refinery output, Electricity and Coal. The reason the core sector is important is that it constitutes 38% of the index of industrial production (IIP) and therefore tends to lead the IIP with a time lag. More importantly, the core sector number has strong externalities. The increase in production of sectors like steel, electricity and coal has a multiplier effect on the economy. Changes in any of these variables have a proportionately higher impact on the GDP… Continue reading
Posted at 6:20 PM , on November 25, 2016
Has India finally tamed the inflation demon?
The CPI and WPI numbers that came in during the week were a whiff of fresh air. CPI inflation at 4.20% is now already well below the RBI comfort level of 5%. The WPI inflation at 3.30% is also showing signs of tapering. There are broadly 4 issues to understand… Continue reading
Posted at 10:45 AM , on October 14, 2016
Consumer price inflation for the month of September 2016 was sharply lower at 4.31% as compared to 5.05% in the month of August 2016. It needs to be remembered that in the month of August, the CPI inflation had already shown a sharp fall from the level of 6.07% in the month of July. This sharp fall in inflation can be largely attributed to food inflation coming under control as well as the contribution of the base effect. The good monsoon during the year as well as the expectations of a bumper Kharif crop have been instrumental in bringing down food inflation as well as overall inflation sharply. Here are some key takeaways from the CPI numbers for September 2016… Continue reading
Posted at 6:34 PM , on October 16, 2015
The September Consumer Price Index (CPI) numbers were the first indication of the waning of the base effect. In the previous policy, the RBI governor had spoken about the base effect problem with respect to inflation. The corresponding period to July and August last year were high inflation months and hence this year was likely to appear lower due to the base effect. Since inflation is a point-to-point number it tends to get influenced by base effect quite drastically. In fact, this base effect was the key reason why the RBI governor had expressed concerns about a rate cut.