Thursday, 28 October 2021

Retail inflation of India drops to 4.35% in September

Retail inflation of India drops to 4.35% in September

India's retail inflation fell to five months low of 4.35% in September from 5.3% in August as food inflation declined sharply, according to the data released by the government on Tuesday.

Food inflation is continuously declining and further eased to 0.68% in September from 3.11% in August.

As defined by the (CPI) consumer price index, inflation stayed within the Reserve Bank of India's (RBI) tolerance band of 2%-6% for the third consecutive month.

Vegetables registered a de-growth of -22% within the food prices, while the food and beverages segment grew 1.01%.

Inflation in the light and fuel category remained elevated at 13.63%.

In the latest monetary policy meeting, the Central bank lowered the inflation forecast at 5.3% from an earlier estimate of 5.7% for the current financial year.

Sakshi Gupta, Senior Economist at HDFC Bank said

"Today's inflation print supports the RBI's calibrated and gradual approach towards liquidity normalization. Moreover, it is likely to take some pressure off the bond market, where the 10-year yield has firmed up after the RBI suspended its G-SAP last week. "While the picture seems rosy for now on inflation, we might not be out of the woods yet with global stagflationary concerns rising,"

Retail inflation India drops to 4.35 in Septemberunsplash image

Read More : RBI sets 9.5% GDP growth rate for FY22

Sakshi Gupta said.

"Energy shortage and rising oil prices are already having ripple effects on production and prices of other commodities. This remains an upside risk for inflation once the base effect wears off from December,"

Meantime, the (IIP) index of industrial production for August surged 11.9%, showed data by the ministry of statistics and program implementation (MoSPI). IIP grew 11.5% in July.

The mining output during August month grew by 23.6%, while the manufacturing sector surged 9.7%.

Meanwhile, the electricity generation in August grew by 16%. Industrial production has been surging for the past few months, mainly due to last year's low base.

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