Retail inflation rises 4.5% in October, IIP slows down in September

NEW DELHI: Retail inflation rose slightly in October led by the prices of fuels, electricity and some foods, while industrial production growth slowed to a seven-month low in September as the base effect slowed and economists said the data provided space for the Reserve Bank of India (RBI) to continue with its easy interest rate policy for now.
Data published by the National Statistical Office (NSO) on Friday showed that inflation, measured by the consumer price index (CPI), rose 4.5% annually, slightly higher than the 4.4% of the previous month and below the 7.6% registered in October 2020. Urban inflation stood at 5% while rural inflation slowed to a 10-month low of 4.1%.
Core inflation (less food and fuel) remained rigid at 6.1% in October, up from 5.9% the previous month. Vegetable prices fell 19.4% during the month while oils and fats rose 33.5% during the month.

“Measures such as the reduction of the excise tax on fuel, the imposition of stock limits and the exemption of the basic import tariff on edible oils are expected to restrain national inflation despite the rising prices of fuel and edible oils in world markets. Inflation in the services sector is likely to remain high as vaccination momentum continues and mobility rebounds to the pre-pandemic level, ”Care Ratings said in a note.
Separate data released by the NSO showed the industrial production index (IIP) grew by 3.1% annually in September, lower than the 11.9% of the previous month and higher than the 1% registered in September 2020. The manufacturing sector grew by 2.7% in September compared to 0.4% in the month above while mining grew 8.6%. The electricity sector advanced 0.9% in September, lower than the 4.9% registered in September 2020. The capital goods sector, seen as a barometer of industrial activity, advanced 1.3% compared to a contraction 1.2% in the month of the previous year.
“India’s IIP growth fell to a 7-month low of 3.1% on September 21, with an adverse base and a sequential contraction in activity at stake. The month was a testament to supply-side disruptions weighing on production, and luckily the downside was limited before the holiday season, prompting a surge in the consumer durables sector, ”according to the firm. research. QuantEco.

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