On an annual basis, PPI rose 6.0 percent last month, down from December's reading.
A decline in the wholesale price index is reassuring from a monetary policy viewpoint, but the sustained decline in manufacturing inflation raises a worrying question
Watch accompanying video of CNBC-TV18’s Ekta Batra detailing about what to expect from August wholesale price index (WPI) inflation data.
Retail inflation slows to its lowest level ever in the month of May. Consumer price index (CPI) drops to just over 2 percent as food prices contract over 1 percent and vegetable prices shrink over 13 percent. Industrial output picks up pace in April to clock a 3.1 percent growth rate. In an interview to CNBC-TV18, A Prasanna, Chief Economist at I-Sec PD shared his views and readings of the inflation data.
Inflation numbers, progress of monsoon rains and key global developments, including the US Fed meeting, will lay the pitch for the stock market movement this week, say analysts.
The wholesale price index (WPI) for the month of December is likely to come in at -1.07 percent versus -1.99 percent seen for the month of November.
Core CPI is expected to come in at the same levels as last month at around 4.3 percent and the range is between 4.2 and 4.5 percent.
Today all eyes will be on the March WPI which according to CNBC-TV18 poll is expected at minus 2.07 percent.
The core inflation is estimated to possibly decline further to a figure of around 0.6 versus around 0.88 percent month-on-month.
The Reserve Bank is scheduled to unveil the fourth bi-monthly monetary policy review on September 30. Declining prices of vegetable and other food articles brought down wholesale inflation sharply to 3.74 percent in August to a nearly five-year low.
On Wednesday, the Federal Open Market Committee ends its two-day review and traders are bracing for an increasingly hawkish tone from Fed Chair Janet Yellen.
Vote on account scheduled on February 14, would not see any changes in terms of policy direction or taxation rates but will be more of a budget for FY14. Market will be keenly watching the fiscal deficit number on that day.
In terms of consensus estimates there is expectation of a definite cool down in CPI and WPI for the month of December. The cool down would be on account of vegetable prices that have come off at least 20-30 percent on a month-on-month basis.
C Rangarajan, Chairman of Prime Minister‘s Economic Advisory Council (PMEAC) said current account deficit (CAD) for this fiscal is likely to be USD 55 billion.
A four-day meeting of China`s top leaders concludes on Tuesday and expectations are high that Beijing is likely to use the opportunity to unveil the next wave of major economic reforms in the world`s second biggest economy.
According to NHRDF data, arrivals of onion at Bangalore wholesale market has increased by 50 per cent to 76,266 quintals today from the last week's level.
Samiran Chakrabarty of Standard Chartered Bank, says the would help reduce inflation going forward. It is probably a good thing to target inflation as long as we are targeting the right kind of inflation.
John Woods of Citi Private Bank, sees limited downside for Asian emerging markets (EMs) and expects some sort of recovery from Q3 onwards. North Asian markets like Taiwan, Hong Kong, Singapore as a function of exports and uptick of growth in United States will see bottoming out first.
The US jobs data was better and the US bond yields too softened by about 5 basis points. There is a possibility that the Fed will talk in dovish tones in the upcoming Fed meeting and some of the recent damage might get unwound. Markets could see a temporary rally said CNBC-TV18's, managing editor, Udayan Mukherjee.
"The currency maybe wobbly, but unfortunately we all know that the currency at least in the case of India has really not been helpful in propelling the export segment in any way," Pan said in an interview to CNBC-TV18.
Pankaj Vaish of Citi said he is most concerned about rupee. The argument about the dollar strength also seems overdone because the dollar hasn't really moved that much in May. He said the dramatic fall against the dollar cannot be blamed onto excessive buying of gold alone.
If we want high growth we have got to get inflation down. I feel that the RBI should be held accountable for delivering on low and stable inflation and they need to do more, says Ajay Shah of NIPFP.
The market would be keenly watching elections for further direction, says Amar Ambani of IIFL. He sees a rate cut of 25bps in June however adds that the central bank may maintain a status quo for rest for the year.
Sharp decline in prices of gold and crude oil, coupled with softening inflation, augur well for the economy as it will help curb the Current Account Deficit, according to economists.
Sandip Sabharwal of Prabhudas Lilladher says Index of Industrial Production (IIP) show that the growth is bottoming out and going forward the WPI and CPI will also start moderating. So, he believes on March 19, Reserve Bank of India will cut by 25 basis points.