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THIS WEEK'S HIGHLIGHTS

* India’s CPI inflation print moderated to 6.71% on expected lines, sequential pace softened further to 0.46% in July. Fuel inflation remained flat sequentially (0.06%). For the last three months, core inflation remained sticky at ~6.25%. The coordinated efforts of fiscal and monetary policy are visible in current softening

* US CPI inflation (8.5%) was reported lower than estimates, largely led by a sharp sequential fall in energy inflation (4.7%). The first signs of weakness in inflation led a rally in equities and bonds. We believe the Feds policy action would guide inflation towards its target of 2%, hence large hike (50bps) is on the anvil

* The double digit growth in IIP (12.3%) was largely due to a favorable base. Electricity sector reported the highest growth (16.4%), while manufacturing and mining grew by 12.5% and 7.5% respectively. Consumer non-durables grew at the lowest rate of 2.9%.

* The electricity amendment bill 2022 was sent to the standing committee amidst protest and opposition. The bill aims to build non-discriminatory open access by allowing private players to supply electricity, enabling competition while ensuring a check on prices. 

* UK’s GDP contracts 0.1% in Q2 2022, largest negative contributor was health care services as Covid activities reduced

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