Economy

Inflation up, industrial growth slows

Inflation in the food segment increased to 4.42% in November as compared to 1.9% in the preceding month.

Inflation in the food segment increased to 4.42% in November as compared to 1.9% in the preceding month.   | Photo Credit: Reuters

A separate government release showed that industrial activity growth slowed sharply in October to 2.24%

Retail inflation accelerated to 4.88% in November on the back of quickening food and oil price rises, according to official data released by the government.

A separate government release showed that industrial activity growth slowed sharply in October to 2.24%.

Inflation as measured by the Consumer Price Index was at 3.58% in October.

It quickened to 4.41% in the food and beverages category in November from 2.26% in October.

In the fuel and light segment it accelerated to 7.92% from 6.36% over the same period.

Volatility is due to food, says expert

As retail inflation zoomed, experts attributed it to the rise in food and oil prices.

“The volatility is primarily because of food and oil prices,” Ranen Banerjee, Partner - Public Finance and Economics at PwC India said.

“But that seeps into others things as well. If oil prices go up, it affects all the other elements in the CPI. The expectation was that inflation would go up. If you look at the variance between RBI’s projections and actual inflation, it is primarily on account of food. If you take out food, then their projections would come quite close.”

The Monetary Policy Committee in its latest policy review on December 6 kept rates unchanged and raised its inflation forecast for the second half of the financial year to 4.3-4.7%.

Inflation in the housing segment quickened to 7.36% in November from 6.68% in October, while the clothing and footwear segment saw a more modest acceleration, to 4.96% from 4.68% over the same period.

Growth in the Index of Industrial Production slowed sharply to 2.24% in October, down from 4.15% in September and 4.46% in August.

“Prior to this, the Purchasing Managers’ Index for October signalled a reduction in manufacturing growth and that has been confirmed by IIP,” D.K. Srivastava, Chief Policy Advisor at EY India said. “This is partly due to the base effect, as last year October saw strong growth.”

“The onset of GST initially led to people destocking, so demand for newly manufactured products went down to almost zero,” Mr. Srivastava added. “Thereafter it picked up, but not too much. This should pick up pace from November onwards, and the rate should be higher then.”

The manufacturing sector saw growth slowing to 2.47% in October from 3.8% in September. While the infrastructure and construction goods sector saw growth accelerating to 5.21% from 0.4% over the same period, the consumer goods segment saw a sharp slowdown during this period—from 3.8% to 0.79%.

The consumer durables segment contracted for the second consecutive month, by 6.89% in October, compared to a contraction of 3.4% in September.

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Printable version | May 31, 2020 4:31:43 PM | https://www.thehindu.com/business/Economy/inflation-accelerates-to-15-month-high-of-488-in-november-industrial-activity-slows/article21510197.ece

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