Diverging Global Growth Trends
The pace of global growth remains subdued, with advanced economies experiencing a sharper slowdown than emerging and developing nations. This growth disparity is influenced by differing macroeconomic fundamentals and policy options.
Steady Rise in the Domestic Economy
Contrary to global trends, domestic economic activity continues to remain robust. Key high-frequency indicators, such as the composite PMI displayed an uptick, reaching 61 in September. Meanwhile, the industrial sector continued its upward trajectory, with IIP recording a 10.3% growth in August.
Softening CPI Inflation Outlook
After remaining above the RBI’s upper tolerance level of 6% for 2 months, CPI inflation cooled down to 5.02% in September, largely due to softening vegetable prices. With this, the average inflation for Q2FY23 is now in line with RBI’s outlook of 6.4%.
No Surprises on the Monetary Policy Front
In the October MPC meeting, the committee unanimously decided to retain the repo rate at 6.5%, emphasising the withdrawal of accommodation. The committee reiterated that it continues to remain vigilant of the evolving inflation dynamics.
Crude Oil Prices Continued to Surge
Tightened supplies due to the extension of production cuts by Saudi Arabia and Russia until the end of 2023 continued to influence the rise in crude oil prices and the average crude oil price (Indian basket) crossed USD93.5 per barrel in September compared to USD 86.4 per barrel in August.
