INDIA: Flash PMIs Prepare Markets for Likely RBI Hike in October
* Flash PMI's surged in September with the Manufacturing PMI at their highest levels since February at +55.7. * Output was up strongly to +58.2 from +54.8 in August and new orders were at their highest since February 2026. * PMI Services rose to +55.8 from +54.1 in August. * The employment sub index moderated to +53 from 55.8 in August but represented a ninth consecutive month of expansion. * Prices charged moderated in September vs the prior month. * The RBI doesn't meet until October 7 but today's release is another input into the growing consensus of a rate hike. * India's headline inflation has seen an aggressive upward trend. In August 2026, CPI spiked to a 20-month high of +4.8%, heavily driven by resurgent food costs and rising core consumer prices. Whilste it remains within the RBI's broader 2%-6% legal tolerance band, the steady 10-month acceleration is forcing the MPC to take pre-emptive action before inflation threatens to breach the critical 5% average projection. * The PMIs reinforce that the economy is strong enough to withstand a rate hike
7. 8 in August and new orders were at their highest since February 2026. 1 in August. 8 in August but represented a ninth consecutive month of expansion.
* Prices charged moderated in September vs the prior month. * The RBI doesn't meet until October 7 but today's release is another input into the growing consensus of a rate hike. * India's headline inflation has seen an aggressive upward trend. 8%, heavily driven by resurgent food costs and rising core consumer prices.
Whilste it remains within the RBI's broader 2%-6% legal tolerance band, the steady 10-month acceleration is forcing the MPC to take pre-emptive action before inflation threatens to breach the critical 5% average projection. * The PMIs reinforce that the economy is strong enough to withstand a rate hike