Inflation

The 0.3 per cent GDP fall in August was below economists' previous forecast of zero growth, deepening the concerns that the UK economy is sliding into recession, Xinhua news agency reported. "The economy shrank in August with both production and services falling back, and with a small downward revision to July's growth the economy contracted in the last three months as a whole," ONS Chief Economist Grant Fitzner explained.

Daniel Leigh, the IMF's head of World Economic Studies Division, said at a news conference on Tuesday, "We do expect that inflation will come back into the inflation tolerance band 4 per cent in fiscal year 2023-2024, and additional monetary tightening is going to ensure that that happens." IMF's chief economist Pierre-Olivier Gourinchas said, "Inflation is still above the central bank target in India at 6.9 per cent (that) were projected for this year and coming down to 5.1 per cent".

Most importantly, the sharply depreciating rupee against the dollar is one of the most significant reasons behind it. India's retail inflation rose to 7 per cent in August from 6.71 per cent in July and this was due to higher food prices. In fact, retail inflation has been beyond the Reserve Bank of India's (RBI) tolerance limit of 6 per cent for eight months in a row.

The overall sown acreage for the Kharif season has declined by 0.8 per cent at the end of September 30, 2022 as compared to last year, the report notes. Bank of Baroda said sowing area of rice and pulses continue to remain deficient, down by 4.8 per cent and four per cent, respectively.

"Moving faster at the start of the hiking cycle clearly conveys our commitment to bring down inflation to our medium-term target," Lagarde said while addressing an event here. As inflation in the euro area is hovering at historically high levels, the ECB lifted main interest rates twice this year by a total of 125 basis points, reports Xinhua news agency.

"There are increasing signs of a recession of the German economy in the sense of a clear, broad-based and prolonged decline in economic output," Xinhua news agency quoted the bank's monthly report issued on Monday as saying. The institution's economic researchers expect the German economy to shrink markedly in the fourth quarter of this year and the first quarter of 2023.

Central banks around the world have been raising interest rates this year with a degree of synchronicity not seen over the past five decades. a trend that is likely to continue well into next year, the World Bank said in a new study. Investors expect central banks to raise global monetary policy rates to almost 4 percent through 2023, an increase of more than 2 percentage points over their 2021 average, it said.

The RBI's monthly bulletin for September 2022, in its chapter on the "State Of Economy" has said that the loss of momentum in global economic activity may be taking the edge off inflation. At the same time, it noted that the economy is poised to shrug off the modest tapering of growth momentum in the first quarter of 2022-23.

Inflation in August, however, was much lesser than 16.23 per cent recorded in June 2022. Wholesale inflation, which is measured by wholesale price index (WPI), was contributed by the rise in prices of mineral oils, food articles, crude petroleum and natural gas, basic metals, chemicals and chemical products, electricity and food products.

These two risks were followed by the potential impact of rising interest rates and slower economic growth, Moody's said in a statement. "Given the supply chain disruptions, multinational corporations (MNCs) have indicated a rising intention to relocate more manufacturing away from China.