Indian food price inflation has continued to accelerate, putting upward pressure on broader inflation. Indian food price inflation has continued to accelerate, putting upward pressure on broader inflation. However, due to strong base effects, the pace of wholesale prices growth is expected to be more restrained in coming months, possibly even a modest slowing. We forecast annual wholesale price inflation quickened to 8.75% in January, from 8.43% previously. Base effects will also weigh heavily on December industrial production data due on Friday.
China’s trade balance for January is expected to narrow to US$11.3bn, from $13.1bn in December. If realised, this will be the smallest surplus since April 2010 and well below its 2010 high of US$28.7bn in July. Strong domestic demand and higher raw material costs has led to annual import growth outpacing that of exports in recent months. While we expect this to continue, it is unlikely to alleviate rhetoric from the US over global imbalances and the slow pace of yuan appreciation.