Official data released Monday by India’s Ministry of Statistics and Programme Implementation showed that the country’s Consumer Price Index (CPI) rose 5.54% year on year in September, accelerating sharply from the revised 4.83% in August and reaching its highest level in nearly two years. The increase was driven mainly by food inflation, which surged from 5.97% to 7.74%, bringing overall inflation close to the upper end of the Reserve Bank of India’s 2–6% target range.
The figures directly underscore the urgency of the Reserve Bank of India’s rate hike last week, its first in nearly four years. With insufficient rainfall continuing to push up food prices—which account for more than a third of the CPI basket—inflation has proved far more persistent than markets had optimistically expected. Expectations of rate cuts or an easing cycle have clearly been dashed.
After the data was released, India’s 10-year government bond yield quickly rose by around 10 basis points to 7.40%, while bond prices came under heavy pressure. A resurgence in inflation and defensive tightening across major emerging-market economies are adding to concerns that global liquidity will remain tight for longer, placing a tangible constraint on cross-border capital flows.
For high-beta markets such as crypto assets, rising inflation across major emerging markets and persistently high borrowing costs mean that pressure from a marginal contraction in global fiat liquidity has yet to ease. Risk appetite is unlikely to find support from macroeconomic fundamentals in the short term, and investors should be alert to the risk of a pullback in $BTC and major tokens amid expectations of liquidity being withdrawn.
#Inflation #MacroEconomy #EmergingMarkets
The figures directly underscore the urgency of the Reserve Bank of India’s rate hike last week, its first in nearly four years. With insufficient rainfall continuing to push up food prices—which account for more than a third of the CPI basket—inflation has proved far more persistent than markets had optimistically expected. Expectations of rate cuts or an easing cycle have clearly been dashed.
After the data was released, India’s 10-year government bond yield quickly rose by around 10 basis points to 7.40%, while bond prices came under heavy pressure. A resurgence in inflation and defensive tightening across major emerging-market economies are adding to concerns that global liquidity will remain tight for longer, placing a tangible constraint on cross-border capital flows.
For high-beta markets such as crypto assets, rising inflation across major emerging markets and persistently high borrowing costs mean that pressure from a marginal contraction in global fiat liquidity has yet to ease. Risk appetite is unlikely to find support from macroeconomic fundamentals in the short term, and investors should be alert to the risk of a pullback in $BTC and major tokens amid expectations of liquidity being withdrawn.
#Inflation #MacroEconomy #EmergingMarkets