Weekly Economic Outlook: September 15-21, 2025
- Remin Francis I R
- 4 days ago
- 2 min read
India’s wholesale inflation story turned a corner in August. Wholesale prices rose 0.52% year-on-year, bouncing back from July’s steep 0.58% decline and topping market expectations of a 0.30% rise. The driver was food, which inched up 0.21% after a sharp 2.15% fall earlier. Wheat prices shot up 4.75%, while milk rose 2.58%, though pulses (-14.85%) and paddy (-0.84%) continued to ease. Manufacturing costs also increased, with inflation at 2.55%, the fastest pace in four months, driven by food products and non-metallic minerals. Fuel, however, remained a drag, down 3.17% and logging its steepest fall since November 2024.
On trade, India’s merchandise deficit narrowed to $26.49 billion from $29.7 billion a year earlier. Imports fell 10.1% to $61.59 billion, thanks to softer crude prices, while exports grew 6.7% to $35 billion despite higher U.S. tariffs introduced in August. Meanwhile, unemployment eased to 5.1%, matching April’s record low, with male unemployment dipping to 5% and female participation rising to 33.7%.
The auto sector hit a speed bump, as passenger vehicle sales dropped 9% year-on-year to 280,839 units in August. Industry leaders, however, remain upbeat, pointing to the recent GST rate cut on vehicles as a likely boost for the festive season ahead.
Globally, central banks stayed in the spotlight. The U.S. Fed delivered its first rate cut since December, trimming the target range by 25 basis points to 4.00%-4.25 %, while projecting further easing into 2026. The Bank of England held rates at 4% but slowed quantitative tightening. In Canada, softer inflation gave the Bank of Canada room to cut rates to 2.5%, its first move in months. Over in Japan, inflation eased to 2.7%, a nine-month low, yet the BoJ kept rates steady at 0.5% while signalling gradual policy normalisation.
Finally, on the reserves front, India’s forex kitty climbed to $702.97 billion as of September 12, inching closer to last year’s record high.
Overall, India’s economic signals are mixed, resilient on jobs and trade, cautious on autos, and showing early signs of inflation returning. The global easing cycle could provide some tailwinds in the months ahead.
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