Market Outlook - BNP PARIBAS - Investment Services India

Table 2: BNP Paribas' Inflation ForecastsJapanUKSwedenCore CPI SACore CPI NSAHeadline CPIRPICPICPIFIndex % m/m % y/y Index % m/m % y/y Index % m/m % y/y Index % m/m % y/y Index % m/m % y/y Index % m/m % y/y2010 100.0 - -1.0 100.0 - -1.0 114.5 - 3.3 223.6 - 4.6 302.5 - 1.2 194.6 - 2.02011 (1) 99.8 - -0.2 99.8 - -0.2 119.6 - 4.5 235.3 - 5.3 311.5 - 3.0 197.4 - 1.52012 (1) 99.5 - -0.3 99.5 - -0.3 122.7 - 2.4 243.7 - 3.6 316.0 - 1.4 200.0 - 1.3Q1 2011 99.8 - -0.8 99.5 - -0.8 117.6 - 4.1 230.9 - 5.3 308.1 - 2.6 196.1 - 1.4Q2 2011 99.9 - -0.3 100.0 - -0.3 119.4 - 4.4 234.9 - 5.1 311.6 - 3.3 197.5 - 1.7Q3 2011 (1) 99.7 - 0.2 99.9 - 0.2 120.1 - 4.7 236.2 - 5.2 311.9 - 3.3 197.2 - 1.6Q4 2011 (1) 99.6 - -0.1 99.7 - -0.1 121.4 - 4.8 239.1 - 5.3 314.6 - 2.8 198.9 - 1.3Q1 2012 (1) 99.4 - -0.4 99.1 - -0.4 121.6 - 3.4 240.3 - 4.1 0.0 - 0.0 0.0 - 0.0Q2 2012 (1) 99.5 - -0.4 99.5 - -0.4 122.7 - 2.8 243.7 - 3.7 0.0 - 0.0 0.0 - 0.0Q3 2012 (1) 99.4 - -0.3 99.5 - -0.3 122.8 - 2.3 244.3 - 3.4 0.0 - 0.0 0.0 - 0.0Q4 2012 (1) 99.5 - -0.1 99.6 - -0.1 123.8 - 2.0 246.4 - 3.1 0.0 - 0.0 0.0 - 0.0Jul 10 99.7 -0.3 -1.0 99.7 -0.4 -1.1 114.3 -0.2 3.1 223.6 -0.2 4.8 302.0 -0.3 1.1 193.7 -0.3 1.7Aug 10 99.5 -0.2 -1.1 99.7 0.0 -1.1 114.9 0.5 3.1 224.5 0.4 4.7 302.1 0.0 0.9 193.7 0.0 1.5Sep 10 99.4 -0.1 -1.2 99.7 0.0 -1.2 114.9 0.0 3.1 225.3 0.4 4.6 304.6 0.8 1.4 195.1 0.7 1.8Oct 10 99.7 0.3 -0.8 100.0 0.3 -0.8 115.2 0.3 3.2 225.8 0.2 4.5 305.6 0.3 1.5 195.7 0.3 1.8Nov 10 99.7 0.0 -0.8 99.8 -0.2 -0.8 115.6 0.4 3.3 226.8 0.4 4.7 306.6 0.3 1.8 196.2 0.2 1.9Dec 10 99.8 0.1 -0.8 99.7 -0.1 -0.8 116.8 1.0 3.7 228.4 0.7 4.8 308.7 0.7 2.3 197.3 0.6 2.3Jan 11 99.8 0.0 -0.8 99.4 -0.3 -0.8 116.9 0.1 4.0 229.0 0.3 5.1 306.2 -0.5 2.5 195.2 -1.1 1.4Feb 11 99.8 0.0 -0.9 99.4 0.0 -0.8 117.8 0.7 4.4 231.3 1.0 5.5 308.0 0.6 2.5 196.2 0.5 1.3Mar 11 99.8 0.0 -0.7 99.7 0.3 -0.7 118.1 0.3 4.0 232.5 0.5 5.3 310.1 0.7 2.9 196.9 0.4 1.5Apr 11 100.0 0.2 -0.3 100.0 0.3 -0.3 119.3 1.0 4.5 234.4 0.8 5.2 311.4 0.4 3.3 197.6 0.4 1.8May 11 100.0 0.0 -0.2 100.1 0.1 -0.2 119.5 0.2 4.5 235.2 0.3 5.2 312.0 0.2 3.3 197.8 0.1 1.7Jun 11 99.7 -0.3 -0.3 99.8 -0.3 -0.3 119.4 -0.1 4.2 235.2 0.0 5.0 311.3 -0.2 3.1 197.2 -0.3 1.5Jul 11 99.8 0.1 0.1 99.8 0.0 0.1 119.4 0.0 4.4 234.7 -0.2 5.0 311.1 0.0 3.3 196.8 -0.2 1.6Aug 11 99.8 0.0 0.3 99.9 0.1 0.2 120.1 0.6 4.5 236.1 0.6 5.2 311.2 0.0 3.4 196.8 0.0 1.6Sep 11 (1) 99.6 -0.2 0.2 99.9 0.0 0.2 120.9 0.6 5.2 237.9 0.8 5.6 313.4 0.7 3.2 198.1 0.7 1.5Oct 11 (1) 99.6 0.0 -0.1 99.9 0.0 -0.1 121.0 0.1 5.1 238.3 0.2 5.5 314.6 0.4 3.3 198.9 0.4 1.6Nov 11 (1) 99.6 0.0 -0.1 99.7 -0.2 -0.1 121.3 0.2 4.9 239.1 0.3 5.4 314.6 0.0 3.0 198.9 0.0 1.4Dec 11 (1) 99.6 0.0 -0.2 99.5 -0.2 -0.2 121.9 0.5 4.4 240.0 0.4 5.1 314.6 0.0 2.2 199.0 0.0 0.8UpdatedNextReleaseSep 30Sep CPI (Oct 28)Oct 19Oct CPI (Nov 15)Oct 11Oct CPI (Nov 10)Source: BNP Paribas, (1) ForecastsChart 6: Japanese CPI (% y/y)Chart 7: UK CPI (% y/y)Source: Reuters EcoWin ProWe expect CPI inflation to return to negative territory as early asOctober, as two special factors that are boosting the annual changeby a combined 0.3pp – a tobacco tax hike and higher non-lifeinsurance premiums – will fall out of the annual comparison.Source: Reuters EcoWin Pro, BNP ParibasCPI inflation reached its highest level in three years at 5.2% y/y inSeptember, exceeding expectations. We forecast inflation will starteasing in October, with the decline gaining pace over the followingmonths, when the energy contribution diminishes and the baseeffect due to VAT disappears. This will change the inflation pictureand explains why the BoE unanimously approved quantitativeeasing.Luigi Speranza/Gizem Kara/Dominique Barbet 20 October 2011Market Mover42www.GlobalMarkets.bnpparibas.com