Скачать или смотреть India’s retail inflation falls & Industrial production contracts | Market Beat

India releases two key data on 12th of every month —retail inflation or CPI and industrial production or IIP. So let us have a look at how the two sets of data panned out.

well it was more like - Kahin Khushi, Kahin Gham

India’s retail inflation plummeted to 5.88% in November, coming in the 2-6% tolerance band of the RBI after 10 months. This is good news, especially for the RBI, as its efforts to tame inflation have finally borne fruit.

Now, we can expect some respite from the relentless rate hikes by the monetary policy committee. Does this mean our EMIs will go down? No, just last week, the monetary policy committee had hiked rates by 35 basis points and that is still to be absorbed by the banks.

All this had led to a spike in our borrowing rate, although our returns from debt funds had also improved considerably.
So, relief is unlikely in near future, but at least there is light at the end of the tunnel.

Next few sets of data will be the key for gauging MPC’s mood as 2-6% is only the tolerance band for the RBI. The real medium-term target is 4%, which India has missed for over three years now.

Moreover, the core inflation was at 6.1%, still above upper limit of the tolerance band. Now, core inflation doesn’t take into account two of the most volatile components of retail inflation—fuel and food.

RBI always looks closely at the core inflation to see how the inflation is reacting to its policy as fuel and food prices are difficult for the central bank to control.
But we can count on easing commodity and food prices and hope of good crop harvest to help improve inflation figures.

The second key set of data released, however, was disappointing as India’s industrial production contracted 4% in October. Remember Index for Industrial Production is released with a lag of one month over CPI. Even in September, the industrial output had risen only 3.5%.

This is the worst figure of the Indian industry in two years.
What the fall in IIP also shows is that MPC’s monetary policy tightening, a 225 bps hike in rates since May, has started to have its effect on India’s growth.
We can only hope that inflation keeps slowing and IIP bounces back soon.


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