October retail inflation rose marginally to 4.48%; September IIP slow

October retail inflation rose marginally to 4.48%; September IIP slow

India’s retail inflation in October rose marginally to 4.48 per cent on a rise in food prices, leaving the Reserve Bank of India to keep interest rates stable for now, government data showed on Friday.

Inflation as measured by the Consumer Price Index (CPI) stood at 4.35 per cent in September. This is the fourth consecutive month that inflation has remained within the RBI’s tolerance band of two per cent-six per cent.

According to data released by the National Statistical Office (NSO), inflation in the food basket rose to 0.85 per cent in October from 0.68 per cent in the previous month.

Prices of vegetables, especially key ingredients in Indian cooking such as onions and tomatoes, rose sharply after unseasonal rains damaged yields last month. Global oil prices rose during the month, leading to a rise in petrol prices.

Meanwhile, the base effect, which had been giving good industrial production numbers for the past few months, lost its sheen with the September index of industrial production falling 3.1 per cent on a year-on-year basis from 11.9 per cent in August, government data showed on Friday. .

The fall in September IIP numbers was mainly on account of normalization of base effect.

The October inflation data will be final before the December 6-8 meeting of the RBI’s rate-setting panel, where it is widely expected to leave the repo rate unchanged at four per cent.

According to a Reuters poll, the RBI is expected to increase its reverse repo rate by 25 basis points first in January-March, followed by a 25 basis points hike in the repo rate to 4.25 per cent in the April-June quarter.

RBI estimates CPI inflation for 2021-22 at 5.3 per cent: 5.1 per cent in Q2, 4.5 per cent in Q3; 5.8 percent in the last quarter of the fiscal year, the risk broadly balanced.

Retail inflation is estimated at 5.2 per cent during the April-June period of 2022-23.

According to the Index of Industrial Production (IIP) data by the National Statistical Office (NSO), the output of the manufacturing sector grew by 2.7 per cent in September 2021.

In September, mining output increased by 8.6 percent and electricity generation by 0.9 percent. There was an increase of one percent in IIP in September 2020.

During April-September this year, IIP grew by 23.5 per cent as against a contraction of 20.8 per cent in the same period last year.

Industrial production has been hit since March last year due to the coronavirus pandemic, when it contracted by 18.7 per cent.

In April 2020, it declined by 57.3 percent due to a decline in economic activity in the wake of the lockdown imposed to prevent the spread of corona virus infection.

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