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Home / Economy / Numbers to watch this week: inflation, pharma results and more

Every Monday, Mint’s Plain Facts section features key data releases you need to keep an eye on during the week. Apart from the UK’s GDP figures, inflation numbers for the US due to be released this week will be keenly tracked by markets across the globe amid concerns about overheating. The earnings of major pharma firms in India and domestic inflation numbers are also due this week. Here are the five big numbers to track:

1. Inflation

CPI inflation has moderated over the past few months
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CPI inflation has moderated over the past few months

BOTH CONSUMER Price Index (CPI) and the Wholesale Price Index (WPI) data are due for release this week. While CPI tracks retail prices (data due on Wednesday), the WPI looks at factory-gate prices of goods (due Friday).

CPI inflation has moderated over the past few months, but a number of factors threaten to disrupt that trend: rising commodity prices, growing pricing power of firms, covid-induced supply chain disruptions, and the easy money policy of the Reserve Bank of India (RBI).

A high base effect and the prospects of bountiful crops amid a normal monsoon could temper some of the inflationary trends, but the trend in wholesale prices does not offer room for much comfort yet. The WPI rose 7.4% in March over the year-ago period, the highest in eight years. If this trend sustains and the wholesale price pressures are passed on to consumers, the CPI could jump sharply.

2. Pharma Earnings

With the second wave of covid-19 still raging in the country, investors will likely be more interested in how the companies project their performance in the coming months
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With the second wave of covid-19 still raging in the country, investors will likely be more interested in how the companies project their performance in the coming months

TWO MAJOR pharmaceutical firms, Dr Reddy’s Laboratories and Cipla, announce their March quarter earnings on Friday. Drug business has been a beneficiary of the pandemic over the past year, and the trend is set to continue.

With the second wave of covid-19 still raging in the country, investors will likely be more interested in how the companies project their performance in the coming months. Come Friday, any hint of stronger-than-expected outlook could lift market sentiments for the sector. The BSE-Healthcare index has already gained 10% since mid-February against a 6% loss for the benchmark 30-stock Sensex as the virus has spread. For Dr Reddy’s, one big reason for optimism is its role in selling Russia’s Sputnik-V vaccine in India. For Cipla, increased demand for drugs such as Remdesivir and Favipiravir is expected to boost the firm’s earnings. Shares of the two companies have gained 10% and 5%, respectively, since mid-February.

3. Opec Report

The second covid-19 wave has put most parts of India under lockdowns again, pulling down fuel demand
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The second covid-19 wave has put most parts of India under lockdowns again, pulling down fuel demand

THE ORGANIZATION of the Petroleum Exporting Countries (Opec) will release its monthly report on the global crude oil market on Tuesday. The report will make projections for demand and imports in key markets, including India. In its April report, the oil cartel had marginally reduced its projection for Indian demand during the January-March quarter. This was due to elevated fuel prices in February, which pushed India’s crude imports to a four-month low. But the report had retained estimates for the rest of 2021—and these could face a downgrade this time.

The second covid-19 wave has put most parts of India under lockdowns again, pulling down fuel demand. The updated Opec projections are important to keep an eye on. Last time there was a nationwide lockdown a year ago, India’s daily demand shrank by a quarter.

4. US Inflation

Some economists and investors worry that inflation could overstay its welcome
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Some economists and investors worry that inflation could overstay its welcome

THE US will release the April numbers for consumer price inflation on Wednesday. Retail prices are on the rise, growing 2.6% year-on-year in March—the first time in a year it breached the Federal Reserve’s 2% target. This has been a cause of worry for investors and policymakers. For now, it has been largely seen as a sign of a recovering economy: both pent-up demand and supply shortages are fuelling the surge. But some economists and investors worry that inflation could overstay its welcome. The Fed, on its part, looks set to hold interest rates low for some more time. Treasury Secretary Janet Yellen, a former Fed chair, spooked markets last week when she hinted support for rate hikes to stop the economy from ‘overheating’. As bond yields soared in panic, she downplayed the remarks, saying she didn’t see inflation as a problem that would stay.

This puts fresh focus on the data this week: will the inflation print force the Fed to reach out for its policy knobs soon enough?

5. UK GDP

Despite lockdown curbs, output expanded 0.4% in February on a monthly basis, early estimates showed
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Despite lockdown curbs, output expanded 0.4% in February on a monthly basis, early estimates showed

THE UK is set to release its first GDP estimates for the January-March quarter on Wednesday. Although the data pertains to the period before large-scale easing of restrictions came into effect in April, it is expected to be an improvement over past quarters in a country that has managed to vaccinate a large proportion of its population. Despite lockdown curbs, output expanded 0.4% in February on a monthly basis, early estimates showed. The growth in February was largely led by manufacturing and construction. Consumer-facing sectors remained hurt. Expect both trends to have continued in March. The faster recovery, rising business sentiment, and a successful vaccination drive have prompted economists to raise their 2021 GDP forecasts for the UK that was among the worst-hit by the pandemic last year. On Thursday, the Bank of England raised its annual GDP forecast to 7.25% from 5% pegged in February.

pooja.d@livemint.com

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