The India Inflation report July 2012


The WPI data begins the catch up with economic data from India for July 2012 after global trends could not break India’s earlier rhythm, though still contused by global shock, with a 52% PMI and a 53 in Services PMI.

The inflation came in well below 7% from a 7.25% revised number for June to 6.87% number for July likely helped by the lack of demand in durable goods witnessed in the IIP and the continuing low basic and intermediate goods that continue to fuel production indices. Markets hold out hopes for aggressive rate cuts turning into a rate sensitive led rally post the inflation data release.

Primary Articles Inflation has settled down to a 10.38% same as 10.46% in June as Fuel price increases have been shelved and Meat Fish and Eggs continue to lead food inflation increases. We believe RBI may hold off on rate cuts till those fiscal changes have been implemented or the alternative disinvestment plan counted as success though the RBI will likely stay away from confusing the markets on the simultaneity of fiscal and monetary impact in terms of its equation with governments.

Inflation values for Food categories have dipped to 10.06% against 10.80% in the previous month and manufactured pdts inflation is just above 5.5% also down from last month


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