Spike in retail inflation worrying, but industrial output growth offers relief

India’s retail inflation rose from 4.91 per cent in November 2021 to 5.59 per cent in December, states the data released by the Ministry of Statistics & Programme Implementation (MoSPI) on Wednesday (January 12).

The Reserve Bank of India would take heart from these numbers because the Consumer Price Index (CPI), used to measure retail inflation, is still within the 4 to 6 per cent limit. For records, the Centre has put the onus on RBI to keep retail inflation at 4 per cent with a margin of 2 per cent on either side for a five-year period ending March 2026.

The apex bank had estimated the CPI inflation at 5.3 per cent for the financial year 2021-22 with an upper margin of 5.7 per cent in the fourth quarter of the fiscal.

Closely following the CPI, the Consumer Food Price Index (CFPI) or food inflation too went up significantly from 1.87 per cent in November to 4.05 per cent in December, the ministry statistics revealed.

The food inflation rose mainly in the backdrop of sharp hike in prices of fats and oils. The prices of meat and fish prices, milk and milk products, pulses too went up during this period. There was some relief with vegetable prices going down by – 2.99 per cent though fruits grew 3.54 per cent.

Also read: Services sector spikes; employment rises first time in 10 months

Besides, the prices of fuel, clothing and footwear and the housing segment went up during the month.

Industrial output up

The data released by the Ministry of Statistics & Programme Implementation revealed that the country’s industrial output or IIP recorded a 1.4 per cent on-year growth in November hitting 128.5. This is a significant development considering that the IIP had dropped to 1.6 per cent a year back in November 2020.

The country’s IIP for April-November, 2021 went up by 17.4 per cent, compared to a contraction of -15.3 per cent rise in the corresponding period a year ago.