India Macro Weekly: Inflation rises, foreign trade strengthens

For the week ending March 18, 2017:
  • Inflation based on both the consumer price index (CPI) and wholesale price index (WPI) inched up in February 2017. While the former increased to 3.65%, up from 3.17% during the previous month; there was some relief from a decline in core inflation, which has been strong during the past few months. 
  • WPI inflation jumped to 6.55%, up from an already elevated 5.25%, on double digit inflation in segments like fuel and coal, even while primary articles and manufactured products’ inflation was relatively controlled.
  • The external economy was strong, as merchandise exports showed a 17.5% growth in February 2017, indicating that demand appetite could be returning to the world economy. Imports too, showed strong growth of 21.8%, on the back of growth in both non-oil imports and oil imports.
  • Foreign tourist arrivals also continued to grow at double digit rates in February 2017.
  • On the asset markets front, oil prices continued to decline, while rupee appreciated sharply and equity markets strengthened.

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