India’s August Economic Surge Drives Highest Price Hikes in a Decade: PMI Report

Fast Summary

• India’s private sector activity expanded at a record pace in August, driven by strong demand, primarily from the services sector.
• HSBC’s India Composite Purchasing Managers’ Index (PMI), compiled by S&P Global, rose to 65.2, its highest reading since the survey began in December 2005.
• This growth was supported by a sharp increase in total new orders – the largest uptick in nearly 18 years – and robust international demand.
• The services sector’s PMI reached an all-time high of 65.6; manufacturing PMI also surged to 59.8, its best level as January 2008.
• Job creation accelerated sharply while businesses raised prices at the fastest rate since February 2013 due to higher costs and strong consumer demand.
• Firms remained highly optimistic about future prospects with sentiment reaching its strongest level as March this year.
• Price hikes fueled concerns about inflation and could influence RBI to maintain restrictive monetary policies longer rather then cutting interest rates soon.

Indian Opinion Analysis
India’s record-breaking private sector expansion highlights robust economic momentum powered by domestic and global demand across sectors like services and manufacturing.Strong business optimism underscores confidence among firms regarding sustained growth opportunities ahead. However,aggressive pricing amidst rising operational costs signals inflationary risks that could challenge consumers’ purchasing power over time unless wage growth matches price increases proportionately.The Reserve Bank of India (RBI) may now face increased pressure to prioritize controlling inflation over supporting liquidity through rate cuts due to potential overheating of prices resulting from surging demands across sectors like exports driving competitiveness globally but stretching inside affordability pressures locally

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