Overall it will be the ninth month of decline that will come through if in case it is in deflation territory and the core inflation is expected then to decline for the fifth straight month.
The real kicker has already come from the consumer price index (CPI) data which was much better than what the street was working with and hence there is heightened expectations that may be the Reserve Bank of India (RBI) could move even before the policy date of September 29.
Now, in terms of the wholesale price index (WPI) data, it is expected to increase in terms of deflation this time to 2.76 percent minus versus minus 2.4 percent and the range again is quite wide. It is minus 2.3 all the way to 3.46 percent minus.
In terms of core as well non-core WPI which also gives the trend in terms what manufacturing is doing at this point in time, what businesses are doing at this point is expected to decline 1.1 percent versus a decline of 0.9 percent. It is interesting because despite it giving an indication of manufacturing one of the key reasons why WPI or core inflation is declining is also because of lower global commodity price.
So, basically a company needs lesser input or lower input cost on a year-on-year basis. That seems to be also reflecting in the WPI data. So, that is an important component in terms of why we are seeing this deflation trend come through in terms of WPI. So, overall it will be the ninth month of decline that will come through if in case it is in deflation territory and core inflation is expected then to decline for the fifth straight month.
In terms of food inflation, remember, vegetables in fact declined closed to eight percent in the CPI data. So that will be a key factor to watch out for in terms of food inflation. The other key component will be pulses because pulses rose around 20 percent, plus in the CPI data, so the rate of inflation in WPI again for pulses as well as vegetables will be two key components to watch for.
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