Every Monday, the Plain Facts section of Mint has major data releases and events to watch during the week. Headline inflation numbers for May are due to be released in India this week. The US and UK central banks are scheduled to hold meetings to review their monetary policies. Representatives of India and the European Union are also due to meet in Brussels to resume talks on strengthening a free trade agreement. The final two venues for the FIFA World Cup to be held later this year will be decided this week. The following main points are worth noting:
India Inflation
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India’s headline inflation data for May will be released on Monday evening. Analysts expect the May inflation figure to be lower than April’s eight-year high of 7.8% due to the higher base. Last year, inflation rose to 6.3 per cent in May from 4.2 per cent in April.
However, it will remain well above the upper band of 6% RBI’s inflation tolerance level for the fifth consecutive month on account of higher food and fuel prices. A Mint survey of 24 economists put the estimate at 7.1%.
With rising inflation, the month of May witnessed measures on both monetary and fiscal sides. The central bank reversed its long-standing policy adjustment, while the Center cut excise duty on fuel, among other steps. However, these measures are unlikely to have a full effect before June.
Earlier this week, the RBI had projected that inflation will average over 6% in this quarter and the next.
India-EU FTA
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India and the European Union will formally resume talks in Brussels on Friday to strengthen a free trade agreement, which has been on hold since 2013. Commerce and Industry Minister Piyush Goyal said that the objective of the FTA would be to provide market access and opportunities. For exporters in India. Both India and the European Union said they hope to conclude the agreement before 2024. Under the FTA, India wants the European Union to conclude agreements on investment protection and geographical indications. Tariffs and data protection have been one of the major areas of disagreement in the negotiations as India seeks to be recognized as a ‘data-secure’ country. India’s exports with the 27-member nation bloc touched a record high of $65 billion in 2021-22, up 57% from 2020-21. India has recently signed FTAs with Australia and the United Arab Emirates, while the FTA with the UK is proposed to end by Diwali this year.
fed meat
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The US Federal Reserve at its last meeting in May unanimously raised the benchmark interest rate by 50 basis points (bps). This was the biggest move since 2000, setting the tone for a quick tightening of monetary policy. In March, the rate had already been hiked by 25 bps, the first hike in more than three years. Another 50-bps hike is on the cards when the Fed announces its next policy on Wednesday.
The Fed said in its last statement that it was “extremely attentive to inflationary risks”. Year-on-year headline inflation remained at 8.3% in May. For the Fed, it’s a long way to go to bring inflation down. Its long-term target of 2%. Even though members noted strong household spending, business investment and job gains, they acknowledged overall economic activity declined in the March quarter. While headwinds from the Ukraine-Russia war still exist, the Fed’s concern is not over.
BOE Meat
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Later this week, the Bank of England (BoE) may hike interest rates for the fifth time since it began raising rates in December last year. Britain is currently facing record-high inflation, which stood at a 40-year high of 9% in April. Economists expect UK inflation to be the highest among G7 countries by 2024. The country is seeing not only an increase in fuel prices like the rest of Europe, but also general price increases in goods and services like in North America.
BoE is battling hard between containing inflation and avoiding recession. The BoE expects production to contract by 1% in the last quarter of 2022 when inflation may also cross the double-digit figure. According to forecasts from the Organization for Economic Co-operation and Development, GDP may see no expansion in 2023, making Britain the major economy worst hit by the Ukraine-Russia war.
fifa play-off
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The final two qualification matches for football’s premier event, the 2022 FIFA World Cup, are set to take place at the Ahmed bin Ali Stadium in Qatar this week. Matches will take place in the ongoing Intercontinental World Cup playoffs, where teams from different continent-based federations compete for World Cup places. So far, 30 countries have qualified for the 32 nations event, which is scheduled to take place in Qatar later this year, from November 21 to December 18.
The final two places will be filled this week: on Monday, Australia will play Peru for a spot in Group D, and on Tuesday, Costa Rica will take on New Zealand for a spot in Group E of the main tournament.
Football fans in India can watch both the matches at 11.30 pm.
According to FIFA, the stadium features innovative cooling technology for “an enjoyable experience for teams and fans” in the Qatari heat at this time of year.