Consumer Price Index-based Inflation (CPI-based Inflation) or retail inflation rose to 4.48 per cent in October compared to 4.35 per cent recorded in September, as per the latest data by the Ministry of Statistics and Programme Implementation. The rise in October comes after three consecutive months of ease recorded in the CPI-based inflation.
It stood at 4.35 per cent in September, 5.3 per cent in August and 5.59 per cent in July. Prior to this, inflation had crept past the RBI-mandated threshold of 6 per cent due to the second and more lethal wave of the COVID-19.
In the month of October, inflation in the cereals and products category rose 0.41 per cent, fruits 4.92 per cent, meat and fish by 7.12 per cent whereas inflation in vegetables contracted by 19.43 per cent.
"The easing of inflation is a relief for the RBI and is an indication that supply-side challenges are reducing. With prices coming down, the RBI may decide to maintain its policy stance in the upcoming MPC meeting," says Rumki Majumdar, Economist at Deloitte India. She adds that the RBI would like to observe the impact of the US Fed's tapering on India's capital flows and currency before taking any step.
Further, the Index for Industrial Production (IIP) in September rose 3.1 per cent to 127.9. IIP helps gauge manufacturing activity undertaken in an economy by varied sectors in a given period. IIP stood at 11.9 per cent in August. The fall is an indication of the moving away of the low base effect. "As anticipated, IIP growth recorded a broad-based plunge to an insipid 3.1% in September 2021, reflecting the base effect, disruption caused by heavy rainfall, and the impact of semiconductor shortages on auto output, despite the pre-festive season inventory buildup suggested by the GST e-way bill data," said Aditi Nayar, chief economist at ICRA.
The indices of industrial production for mining increased 8.6 per cent to 95.1, electricity rose 0.9 per cent to 129.9 and manufacturing rose 2.7 per cent to 167.9, as per the latest data. "In other words, the festive season has pushed up demand for discretionary goods and the urban demand, and activity in the manufacturing sector, to meet this rising demand," says Majumdar.
