India’s retail inflation rose to a five-month high of 7.41 percent in September from 7 percent in the previous month, staying well above the RBI’s upper tolerance band for the ninth straight month, data released by the Ministry of Statistics & Programme Implementation (MoSPI) showed on Wednesday.
Factory output, measured through the Index of Industrial Production (IIP), contracted 0.8 percent in August, as per the MoSPI data.
This latest retail inflation data is likely to put more pressure on the RBI, which has already raised its key repo rate by 190 basis points in four tranches this fiscal year.
Food inflation, which accounts for nearly half the CPI basket, jumped 8.60 percent in September 2022 as against 7.62 percent in August.
The central government has mandated the RBI to contain retail inflation at 4 percent with a margin of 2 percent on either side for a five-year period ending March 2026.
According to a Reuters poll of 47 economists suggested inflation – as measured by the Consumer Price Index – rose to an annual 7.3 percent in September from 7 percent the previous month.
Hit by erratic rainfall and supply disruptions due to Russia’s invasion of Ukraine, prices of daily consumables like cereals and vegetables which form the largest category in the inflation basket have climbed over the past two years.
Coming to industrial output, which has contracted 0.8 percent in August, it’s a clear sign of industrial sector recovery losing momentum.
The IIP had grown 13 percent in August 2021.
The manufacturing sector’s output contracted 0.7 percent in August 2022. The mining output contracted 3.9 percent, while power generation increased 1.4 percent during August.
In April 2020, industrial production had contracted 57.3 percent due to a decline in economic activities in the wake of the lockdown imposed to curb the spread of coronavirus infections.
