Every Monday, Mint’s Plain Facts section features five key data releases to watch out for in the coming week. The week starts with India’s wholesale inflation data, which will give a sense of the factory-gate price pressures the country is facing. Bank credit growth data is also due. Global markets will watch out for a key crude oil report and inflation data from the UK and the EU. Here are the numbers to track:

 

1. Wholesale inflation

India will release the October inflation data based on the wholesale price index (WPI) on Monday. Base effects and low food prices have led to WPI inflation coming off the multi-year-highs it had hit earlier this year. However, the worry remains. In September, it was still high at 10.66%.

The comfort from a favourable base will continue in October, but wholesale inflation will face heat from rising crude oil prices and higher raw material costs because of supply chain bottlenecks. Fuel and power inflation has been double the headline WPI inflation and a 12% month-on-month rise in India’s crude oil basket in October does not help, analysts said.

The manufactured products group has also been outpacing the headline rate. Wholesale prices of vegetables have surged, too, adding additional pressure in October.

WPI inflation is not the reference point for monetary policy, but the risk that it will feed into retail inflation is hard to ignore.

 

2. Credit growth

The Reserve Bank of India will this week release data on credit and deposits of commercial banks for the fortnight ended 5 November. Bank deposit growth has been strong through the first half of the fiscal year. Overall credit trends have also improved in the last few months as a result of the easing of curbs imposed to contain the spread of coronavirus and the start of the festive season. However, loan growth slowed marginally in the fortnight ending 22 October and is still below pre-covid levels. It is largely driven by retail, agriculture and allied activities, and industry segments, while services loans are still muted.

Credit growth for the financial year 2021-22 is estimated to be in the range of 7.5% to 8%, supported by economic expansion, government credit schemes, and low interest rates, said a CARE Ratings report. With reduced corporate stress and greater provisioning levels across banks, the sector’s medium-term prospects appear promising.

 

3. Oil report

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

Crude prices have risen this year as a rebound in economic activity has boosted consumption and depleted inventory. This led IEA to warn of a jump in volatility and the potential for higher prices in its last report.

Last week, the oil producing cartel, the Organization of the Petroleum Exporting Countries (OPEC), reduced its worldwide oil demand forecast, citing decreased demand from key consumers China and India and the global impact of high energy prices. This puts the spotlight on IEA. Will it do the same?

 

4. UK inflation

Retail inflation in the UK eased in September, but only marginally, from 3% to 2.9%. Part of the easing was because of base effects, as restaurant prices had recovered last year after the government’s subsidy scheme for eating out ended in September 2020. The upward bias otherwise remains. A rise in transport costs, with the rise in prices of petrol and second-hand cars, have stoked up the cost of living. October figures are awaited on Wednesday.
Inflation is expected to rise further. The Bank of England (BoE) expects inflation to reach 5% around spring next year before it starts moderating. The central bank is seeing inflation as a wider phenomenon and not just limited to the UK. It expects the high rates to be temporary and decline once supply constraints ease and demand slows down. With the UK economy now recovering, as unemployment rates have fallen, BoE has indicated an interest rate hike to bring inflation back to its target of 2%.

 

5. Euro area inflation

Inflation numbers for October are due from the euro area as well on Wednesday. Even with the headline figure rising to a 13-year-high of 3.4% in September, European Central Bank (ECB) president Christine Lagarde maintains that it’s “largely transitory”. The bank is preserving its ‘favourable’ financing conditions for all sectors of the economy, by keeping its monetary stimulus plan unchanged. ECB predicts that inflation will peak later this year, averaging 2.2% in 2021 and 1.7% in 2022. The bank may revise its inflation projections in December.

The inflationary pressure in the area is part of the bottlenecks in global supply chains, causing costs of raw material and shipping to soar and leading to an increase in energy prices.

Lagarde has been facing some backlash, being called insensitive to the plight of citizens by European media. The October data will reveal whether or not the leeway for her has further narrowed.

 

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