Inflation, as measured by the consumer price index (CPI), rose an annual 4.5% slightly higher than the 4.4% in the previous month and below the 7.6% recorded in October 2020, states the latest data by the National Statistical Office (NSO). Retail inflation was led by fuel, light and food prices.
Care Ratings, in a note, said measures such as cut in excise duty on fuel, imposition of stock limits and waiver of basic import duty on edible oils are expected to restrict domestic inflation despite soaring prices of fuel and edible oils in the global markets. “The inflation in the services sector is likely to remain elevated as momentum in vaccination continues and mobility rebounds to the pre-pandemic level.”
NSO data showed that core inflation remained sticky at 6.1% in October, above the 5.9% in the previous month. Prices of vegetables fell 19.4% during the month while oils and fats rose 33.5% during the month. Moreover, separate data by NSO showed the index of industrial production (IIP) rose an annual 3.1% in September, lower than the 11.9% in the previous month and above the 1% recorded in September 2020.
It stated that the manufacturing sector grew 2.7% in September compared to 0.4% in the year earlier month, while mining grew 8.6%. The electricity sector rose 0.9% in September, lower than the 4.9% recorded in September 2020. The capital goods sector, regarded as a barometer of industrial activity, rose 1.3% compared to a contraction of 1.2% in the year earlier month.
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According to QuantEco, a research firm, India’s IIP growth slipped to a 7-month low of 3.1% in September 21 with an adverse base and sequential contraction in activity both at play. It said the month was a testimony to supply side disruptions weighing on production, with the downside thankfully getting capped by ahead of festive season led ramp up in consumer durables sector.
