India WPI, Loan Growth, Crude Oil Report

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Every Monday, Mint’s Plain Facts section features five key data posts to watch for over the coming week. The week begins with wholesale inflation data from India, which will give some idea of ​​the ex-factory price pressures the country is facing. Data on bank credit growth is also expected. Global markets will be watching a key crude oil report and inflation data from the UK and EU. Here are the numbers to follow:

1. Wholesale inflation

India will release October inflation data based on the Wholesale Price Index (WPI) on Monday. Base effects and low food prices have driven WPI inflation out of multi-year highs it reached earlier this year. However, the concern remains. In September, it was still high at 10.66%.

The comfort of a favorable base will continue into October, but wholesale inflation will face the heat of rising crude oil prices and higher raw material costs due to supply chain bottlenecks. ‘supply. Fuel and power inflation has been double WPI headline inflation and a 12% mo-mo increase in India’s crude oil basket in October is not helping, analysts said. .

The manufactures group also exceeded the overall rate. Wholesale prices for vegetables also jumped, adding further pressure in October.

WPI inflation is not the benchmark for monetary policy, but the risk it fuels retail price inflation is hard to ignore.

2. Credit growth

The Reserve Bank of India will release commercial bank credit and deposit data for the fortnight ending November 5 this week. Growth in bank deposits was strong throughout the first half of the year. Overall credit trends have also improved in recent months due to the easing of restrictions imposed to contain the spread of the coronavirus and the start of the holiday season. However, loan growth slowed slightly in the fortnight ending October 22 and is still below pre-Covid levels. It is largely driven by the retail trade, agriculture and allied activities, and industrial segments, while lending to services is still limited.

Credit growth for the 2021-2022 fiscal year is estimated to be 7.5% to 8%, supported by economic expansion, government credit programs and low interest rates, according to a CARE Ratings report. With reduced business stress and higher provisioning levels at banks, the medium-term outlook for the industry looks bright.

3. Oil report

The International Energy Agency (IEA), a Paris-based energy policy adviser to 29 countries and the European Commission, will release its closely watched monthly oil report on Tuesday. In its October report, the agency raised its forecast for global oil demand for this year and next due to a severe shortage of natural gas and coal supplies and increasing mobility trends. .

Crude prices have risen this year as a rebound in economic activity boosted consumption and depleted stocks. This led the IEA to warn of increased volatility and the potential for price increases in its latest report.

Last week, the cartel of oil producers, the Organization of the Petroleum Exporting Countries (OPEC), cut its forecast for global oil demand, citing lower demand from major Chinese and Indian consumers and the global impact high energy prices. This emphasizes the IEA. Will he do the same?

4. UK inflation

UK selling price inflation slowed in September, but only marginally, from 3% to 2.9%. Some of the easing was due to base effects, as restaurant prices rebounded last year after the government’s restaurant meal subsidy program ended in September 2020. The upward bias also persists. Rising transportation costs, along with rising prices for gasoline and used cars, have pushed up the cost of living. October figures are due Wednesday.
Inflation is expected to rise further. The Bank of England (BoE) expects inflation to hit 5% by the spring of next year before starting to moderate. The central bank sees inflation as a larger phenomenon and not just limited to the UK. He expects the high rates to be temporary and ease once supply constraints ease and demand slows. With the UK economy recovering and unemployment rates falling, the BoE has signaled a hike in interest rates to bring inflation back to its 2% target.

5. Inflation in the euro area

Inflation figures for October are also expected from the eurozone on Wednesday. Even if the overall figure reached a 13-year high of 3.4% in September, the President of the European Central Bank (ECB) Christine Lagarde maintains that it is “largely transitory”. The bank preserves its “favorable” financing conditions for all sectors The ECB predicts that inflation will peak later this year, with an average of 2.2% in 2021 and 1.7% in 2022. The bank could revise its inflation projections in December.

Inflationary pressure in the region is one of the bottlenecks in global supply chains, driving up raw material and transportation costs and pushing up energy prices.

Lagarde has faced negative reactions, being described as insensitive to the plight of citizens by the European media. October’s data will reveal whether or not its room for maneuver has narrowed further.

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