It is a twin bonanza for the economy as the Consumer Price Index (CPI) for September has gone down and the industrial production for July has made a remarkable growth defying slowdown from the previous month. The CPI Inflation for September was recorded 3.28%, down from previous month’s 3.36% mainly due to fall in food prices post monsoon.
The industrial production, which grew a meagre 1.2%, bearing the brunt of a dismal show of the manufacturing sector, made a remarkable comeback at 4.3%. Both CPI and IIP defied conservative predictions, including ET Now’s, which had predicted CPI to rise 3.4% and IIP to rise 2.5%. However, the with August’s industrial production at 4.3%, it is inching towards 4.5% growth in July last year.
The mining sector in August grew 9.4% as compared to 4.8% in July, while manufacturing sector grew 3.1% as compared to 0.1% in the previous month. The electricity sector also rose with its output at 8.3% as compared to 6.5% in July. Primary goods output was 7.1%, up from 2.3% in July. Capital goods output grew 5.4% from -1% in the previous month.
In August, the inflation accelerated to 3.36% on the back of a surge in food prices during the period. The Reserve Bank of India kept the repo rate unchanged last at 6% in its latest credit and monetary policy review, given the predictions of rising headline inflation. The central bank kept the policy stance neutral with the objective of limiting the medium-term target for CPI of 4% within a band of plus/minus 2%, while supporting growth.The lower inflation may now put pressure on the RBI to cut rates in its next monetary policy meeting.
The CPI food inflation fell to 1.25% in September from 1.52% in August. However, CPI fuel and light inflation grew 5.56% as compared to 4.94% in August, and CPI clothing & footwear at 4.63% as compared to 4.58% in August. While the CPI rural inflation has gone down from 3.22% in August to 3.15% in September, the urban inflation has gone up from 3.35% in August to 3.44% in September.