People School

  Dear Readers, The term "immaculate disinflation" has gained significant attention lately, especially as global inflation rates start to come down. Economist Paul Krugman coined the term, which refers to disinflation without an increase in unemployment. However, disinflation has not been entirely painless for everyone, as some beleaguered regional banks in the US face a slow run on their deposits. In India, retail inflation for April was 4.7%, the lowest since October 2021, due mainly to the base effect. However, month-on-month retail inflation increased from 0.23% in March to 0.51% in April, indicating that price pressures continue, despite the year-on-year optics. Similarly, the CMIE Core index, which excludes food, fuel, light, and fuel for vehicles, fell from 6.2% in March to 5.9% in April, but went up month-on-month from 0.27% to 0.58%, indicating that companies still have pricing power. The Index of Industrial Production (IIP) numbers indicate that disinflation h...

  Iron ore prices have plummeted to $104 a tonne from their peak of $130 a tonne in March. This fall has brought iron ore prices to the level last seen in November 2022. The market did not anticipate this drop in iron ore prices, especially after the Chinese economy opened up completely, ending COVID-19 lockdowns and restrictions on mobility earlier this year. But the issue is not just about iron ore or steel; China's economy is growing in a lopsided manner. Its manufacturing sector is under pressure despite receiving a boost from the economy's reopening, with the April manufacturing PMI slipping to 49.2 compared to March's 51.9, indicating a contraction in activity. In contrast, the services PMI reading was still healthy at 56.4 but lower than the March figure of 57.8. Some experts speculate that China's economy is experiencing two types of recovery, one being a struggling manufacturing industry and the other being a robust domestic economy driven by consumer spendin...