Inflation Is Down And Moderates To 6.8%
Inflation levels have cooled off to 6.83 per cent in August on an annual basis after hitting a 15 month high of 7.44 per cent in July, data released by the Ministry of Statistics and Programme Implementation on September 12 showed
Our Top Reports For Today
- [00:50] Inflation moderates to 6.8% but cereals, pulses and vegetables inflation levels still high with Vivek Kumar
- [07:08] MidCaps & Small Caps pounded in the stockmarkets. The Core Report hinted so.
- [09:12] IPhone 15 that will be sold in India will be made in India too.
- [12:16] US is launching fresh rounds of Covid vaccines, should India take note? with Dr Chandrakant Lahariya
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Inflation
Inflation levels have cooled off to 6.83 per cent in August on an annual basis after hitting a 15 month high of 7.44 per cent in July, data released by the Ministry of Statistics and Programme Implementation on September 12 showed.
Food price inflation was at 9.94 per cent, down from 11.51 per cent in July 2023.
Analysts had expected inflation to remain high in September and closer to 7%.
However, we need to dive a little deeper. Vegetables were at 26% which are down from 37% in the previous month. This is a sharp drop and likely an outcome of the tomato effect, prices of it falling from its frightening highs.
Cereals and pulses are still holding high. Cereal inflation is at 11.85% or closer to 12% compared to around 13% in the previous month. This includes rice and wheat.
Pulses inflation was closer to 13% or 13.05% as compared to 13.27% in the previous month of July, a very marginal change.
Edible oils continued to pull down the overall inflation number at -15% but that is higher than the -16.80 in the previous month. So while in the negative, prices are rising, albeit very slightly. Edible oil imports are already hitting records and could lead to price pressures as well.
Inflation in spices is still rising, from 21.6% in July to around 23% in August.
To understand the numbers and impact better, I reached out to Vivek Kumar, Economist at QuantEco Research and began by asking him his takeaways from the numbers.
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MidCaps Pounded
Just yesterday, as on earlier occasions, The Core Report spent some time narrating why the mid and small cap stock universe was on the edge.
Yesterday, Kotak Securities said it was effectively pulling the plug on the midcap stock space because there was nothing else it could do or find anymore stocks or ideas, so strongly they had run up.
Moreover, it cast some pretty direct aspersions on some stocks, particularly those involved in Government contracts.
Later yesterday, mid and small cap stock indices fell sharply, upto 4%, much more or lower than the market as a whole
Incidentally, the day began with analysts dreamily speculating of the Nifty 50 hitting 21,000 by Diwali or in two months' time.
I am assuming that by evening, there was a reality check, a small one perhaps.
Now, 21,000 may well happen but that thought will mostly be paused for a few days, or at least till later this week.
And yes, the markets barely held their gains. The Sensex was up 94.05 points at 67,221.13, and the Nifty was down 3.10 points at 19,993.20.
There was a brief hiccup in the markets and with auto stocks after Nitin Gadkari, Minister of Road Transport and Highways of India, said he planned to approach the Finance Minister Nirmala Sitharaman with an additional tax proposal on diesel vehicles of 10 per cent. This, the minister said, would help push phasing out of older diesel vehicles. He, however, denied the statement later.
The minister did say that there had been a decline in the production of diesel cars since 2014, when they accounted for 52 per cent of the total production, but now they make up 18 per cent.
Moral of the story: wait till a proposal becomes reality I guess before reacting.
New IPhone Cracks It
Speaking of reality. The latest iPhone 15 that launched last night will be available in India and likely made in India as well.
This was on the cards but the manufacturer has moved faster than perhaps many expected.
Bloomberg News is reporting that Apple Inc. plans to make the India-built iPhone 15 available in India and some other regions on the global sales debut day. While the majority of iPhone 15s will still come from China, that would be the first time a latest generation, India-assembled device is available on the first day of sale, they said, asking not to be identified as the matter is private.
Apple’s supplier Foxconn Technology Group began production of the iPhone in Tamil nadu last month.
For all the complexity in rerouting supply chains, there are some products where evidently things can move fast. This includes electric cars by the way though it might take a little longer.
Earlier, India production was behind China anywhere between 6 to 9 months but that has changed to just weeks, Bloomberg is reporting. Apple has increased the proportion of iPhones it assembles in India to reach 7% at the end of March.
Meanwhile, as we had discussed a few days ago, Apple products including phones have been banned for use by government agencies and state-owned enterprises in China.
The impact of that on sales could be sharp.
Speaking of production shifting, Mexico has now overtaken China as the principal exporter to the United States of America.
By any stretch this is an important development and of course has been in the making for some time.
Mexico made up 15% and China made up 14.6% of US imports in July
Though why Mexico which is right next door did not occupy this status earlier is a subject for a different forum.
Thanks to strong exports, Mexico has the world’s strongest currency this year, says Bloomberg and one of the best performing stock markets.
FDI is up more than 40% in 2023 and Tesla is yet to start building a $5 billion factory.
The last time there was so much action in this region was when the North American Free Trade Agreement was signed in the 1990s.
Separately, a few months ago South Korea exported more goods to the US than to China last year for the first time in almost two decades, highlighting shifting trade patterns once again
Goods exports from South Korea to China fell almost 10 per cent to $122bn between 2021 and 2022, according to data released by the Bank of Korea in June and reported by the Financial Times.
By contrast goods exports to the US increased by more than 22 per cent over the same period to $139bn.
Some health news
The United States Food and Drug Administration cleared updated Covid-19 shots, which should protect against the latest versions of the virus now circulating—if people get them, the WSJ is reporting.
The vaccines, one from Pfizer and partner BioNTech and another from
Moderna were greenlighted by the health agency on Monday for adults and children 6 months and older.
The doses should be available at pharmacies, doctor’s offices and other vaccination sites within a few days, if not sooner, after the Centers for Disease Control and Prevention recommends the shots as early as Tuesday, the WSJ said.
Now, for most of us, it is a hope and desire that Covid19 is distant history. The US move seems to suggest it is very much with us and we should be thinking about it, if not doing something.
The more pertinent question of course is should India also think about renewing and reinvigorating its own successful Covid vaccine programme.
And separately, many of you travel to the United States. If new and improved Covid19 variations are floating around, should you be worried and what should be your course of action.
For answers to all these questions, I reached out to Dr Chandrakant Lahariya, a medical doctor, infectious diseases and immunisation public health specialist with long stints at the World Health Organisation worldwide and other agencies. I began by asking him if India should take note of the fact that the US or countries like the US are launching new rounds of Covid vaccines.
