August PPI and industrial output turned out to be softer than expected:
* IP -0.2%y/y vs 0.3% expected and -4.4% in July
* PPI 2.5%y/y vs 2.8% expected and 2.8% in July
The improvement in the year-on-year industrial output growth rate reflects a statisticall base effect, as output growth turned negative in August 2008. On a month-on-month basis, output fell for the second consecutive month, signalling that the near-term outlook remains fragile. The slow-down in PPI inflation is tentatively positive. However, PPI inflation will have to decrease farther to have a visible impact on CPI. Moreover, we do not expect any impact on monetary policy.