September 2024 Global Economic Insights: US producer prices rise 1.8%, China’s inflation at 0.4%, and India’s tax collections surge 18.3%

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Global economic conditions reflected diverse trends in inflation, industrial production, and financial movements across major economies. Producer prices in the United States increased by 1.8% year-on-year (YoY) in September, marking the lowest rise in the past seven months. This figure comes after an upwardly revised 1.9% increase in August. The slowdown in producer prices reflects easing supply chain pressures and commodity prices, which may have broad implications for inflation and monetary policy.
In China, consumer inflation stood at 0.4% YoY in September, falling below both market forecasts and August’s 0.6%. This suggests that China’s economic recovery remains fragile, with weak domestic demand and potential deflationary pressures. The low inflation may influence the country’s monetary policy, with expectations of further easing measures to stimulate growth.
The United Kingdom’s industrial production contracted by 1.6% YoY in August, improving slightly from a 2.2% decline in July. While the pace of contraction has eased, the sector continues to face challenges from weak demand, labor shortages, and high energy costs. This indicates a persistent struggle within the UK’s industrial sector as it navigates post-pandemic recovery and Brexit-related disruptions.
India’s industrial production saw a slight contraction of 0.1% YoY in August, a significant shift from the 4.7% growth seen in July. This unexpected decline suggests volatility in the country’s manufacturing sector, driven by fluctuating demand and global economic headwinds. The contraction underscores the challenges faced by India’s industries in maintaining growth momentum.
In a positive development for India, net direct tax collections increased by 18.3% YoY to reach Rs 11.3 trillion between April 1 and October 10, 2024, according to the Ministry of Finance. This surge in tax revenue highlights the government’s success in improving compliance and broadening the tax base, which is crucial for funding public expenditure and supporting economic growth.
According to the Reserve Bank of India’s annual census, the United States remained the largest source of foreign direct investment (FDI) into India, followed by Mauritius, Singapore, and the United Kingdom. The strong inflow of FDI from these countries underscores India’s appeal as a key investment destination, particularly in sectors such as technology, manufacturing, and infrastructure.
On the corporate front, the State Bank of India (SBI) is set to raise up to Rs 5,000 crore through additional tier-1 (AT-1) bonds next week, according to a report from The Economic Times on October 15. The funds raised will be used to bolster the bank’s core equity capital as credit demand continues to rise across the country.
In a similar move earlier this year, SBI raised Rs 7,500 crore in September through its second issue of Basel III-compliant tier-2 bonds for FY25, at a coupon rate of 7.33%. To date, the bank has raised Rs 15,000 crore in the current fiscal year from tier-2 bonds. The strong investor interest in SBI bonds, which carry a 15-year tenor and a call option after 10 years, underscores the bank’s solid financial standing and the trust placed in it by market participants.
In addition, SBI has announced plans to enhance the threshold under its instant loan scheme from the current Rs 5 crore to ensure easy and adequate credit availability for the Micro, Small, and Medium Enterprises (MSME) sector. This move is aimed at providing greater financial support to smaller businesses, which form a crucial part of India’s economy.
The global economic landscape reveals mixed trends, with inflation moderating in major economies, while industrial production faces headwinds. India stands out with robust tax collections and strong FDI inflows, reflecting its growing economic stature. Meanwhile, SBI’s proactive steps to raise capital and support the MSME sector demonstrate its commitment to fostering financial stability and supporting economic growth.