Debt Market Update
- Retail inflation eased to a 5-month low of 6.71% in July 2022 (7.01% in June 2022). Notwithstanding the downtrend in CPI, this is the seventh successive month retail inflation has exceeded the RBI’s upper tolerance limit of 6%. In a bid to check inflation, the Monetary Policy Committee (MPC) of the RBI had hiked the repo rate by 50 basis points to 5.40%.
- Wholesale price-based inflation (WPI) eased to 13.93% in July 2022 (15.18% in June 2022). WPI remained sticky at higher levels owing to rise in prices of mineral oils, food articles, crude petroleum & natural gas, basic metals, electricity, chemicals & chemical products, food products vis-à-vis the corresponding month of the previous year.
- The country’s industrial output (IIP) decelerated to 12.3% in June 2022 (19.6% in May 2022) owing to gains in manufacturing (12.5%), electricity (16.4%), mining sectors (7.5%). Over the April-June 2022 quarter, IIP has surged 12.7%, compared to a spike of 44.4% in the corresponding period a year ago owing to low base effect.
- India's exports rose by 2.14% to USD36.3bn in July 2022 (23.5% in June 2022) while trade deficit almost tripled (YoY) to USD30bn during the month. Imports surged by 43.6% YoY to USD66.3bn in July 2022. Trade deficit was USD10.6bn in July 2021.
- Gross GST collections surged 28% YoY to Rs 1.49 crores during July 2022 (1.44 crores in June 2022) - the second highest level since GST rollout in July 2017. Improved consumption on the back of economic recovery and better anti-evasion measures were key drivers in the improved collections.
