Weekly policy watch: Retail, wholesale inflation data in focus this week | Economy & Policy News

India’s economic calendar this week will be dominated by fresh inflation data and updates on the country’s external financial position.

WPI inflation data due on September 14

The moderation was mainly due to a sharp fall in energy price inflation, which offset higher prices of food, primary articles and manufactured goods. Fuel and power inflation fell to 20.05 per cent in July from 27.41 per cent in June. Inflation in crude petroleum and natural gas declined to 26.99 per cent from 34.75 per cent, while mineral oil inflation fell to 32.4 per cent from 46.48 per cent.

However, manufactured products, which have a 63.1 per cent weight in the WPI, saw inflation rise to 8.29 per cent in July from 7.48 per cent in June. This was the highest level recorded under the current series, with price pressures seen across food, textiles, chemicals, pharmaceuticals and other categories.

Retail inflation data for August

Retail inflation has risen steadily from 2.75 per cent in January to 4.45 per cent in July. Food prices have been a key factor behind the increase. Inflation based on the Consumer Food Price Index (CFPI) rose to 5.52 per cent in July from 5.32 per cent in June.

Food inflation increased in both rural and urban areas. Rural food inflation rose to 5.79 per cent in July from 5.45 per cent in June, while urban food inflation increased to 5.05 per cent from 5.09 per cent.

The August data will offer a clearer picture of whether food price pressures are continuing to push up overall retail inflation.

Forex reserves data on September 18

Foreign exchange reserves data will be released on September 18.

India’s reserves rose by a record $44.9 billion to $785.7 billion in the week ended September 4, driven by strong dollar inflows through the Reserve Bank of India’s (RBI’s) concessional swap window, particularly through foreign currency non-resident bank (FCNR(B)) deposits.

The sharp increase took India past Russia to become the world’s fourth-largest holder of foreign exchange reserves, behind China, Japan and Switzerland, according to data by Bloomberg. Reserves had stood at about $740 billion in the previous week.

Despite the rise in reserves, the rupee remains under pressure. The currency fell for a fourth straight session on Friday to close at 95.56 against the US dollar, compared with 94.45 a day earlier. Higher crude oil prices and US Treasury yields have weighed on the rupee, while intervention by the RBI helped limit its losses. The rupee has weakened 4.79 per cent since the start of the West Asia conflict and 0.4 per cent so far this month.