- US headline inflation to remain elevated at 3%
- China retail sales and money growth data to shed light on the economy
- India’s inflation and trade data to provide market pleasing signals
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Forthcoming data releases
China: Retail sales growth is expected to ease slightly to 2.8% yoy in October, down from 3.0% yoy in September, despite ongoing subsidies for durable goods such as home appliances and electronics. Household sentiment remains weak due to poor job prospects, slowing income growth, and high precautionary savings. While external demand is gradually recovering, industrial activity is likely constrained by muted domestic demand and persistent overcapacity, with industrial production growth expected to hold steady at 6.5% yoy in October. Firms are scaling back operations under the “anti-involution” initiative. Fixed asset investment (FAI) is expected to contract further to -0.8% yoy ytd, reflecting cautious capital expenditure. Property FAI continues to be the main driver of the overall FAI decline. The M1–M2 gap narrowed further in October; although faster M1 growth has supported the A-share market, weak credit expansion indicates that liquidity injections have yet to fully transmit to the real economy.
India: Inflation and trade numbers are due in the second week of November. We expect Oct CPI inflation to ease to a fresh low of 0.2% yoy (weakest print in the current series) from 1.5% in Sep on continued food disinflation, base effects, and impact of GST cuts. Food disinflation is likely to deepen as high-frequency trends pointed to a correction in perishables, pulses, cereals etc. The disinflationary impulse from indirect tax relaxation is likely to be more apparent as changes took effect in late Sept. Core inflation might stay firm on higher precious metals, before easing in Nov. October is, nonetheless, likely to mark the trough in the current cycle, with base effects expected to see inflation resume its gradual climb in the coming months. Meanwhile, unseasonal rains might impinge on the supply of fresh food perishables in the near-term, which alongside an increase in import duties on selected pulses, reinforces our view that the bulk of the disinflation in food is likely behind us. In response to potential supply shortages and sensitivities around food costs, we expect authorities to undertake administrative measures, including steps to boost inter-state supplies to contain price increases. On the trade front, base effects and part payback from frontloading could see exports decline in Oct, while imports moderate from Sep highs on nominal terms.
Economics Team
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