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Last Updated Wednesday January 17 2018 11:55 PM IST

Economy not out of the woods yet? Inflation jumps to 15-month high

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Economy not out of the woods yet? Inflation jumps to 15-month high On overall basis, the inflation in the food segment increased to 4.42 per cent in November as compared to 1.9 per cent in the preceding month.

New Delhi: The economy may not be out of the woods yet with retail inflation shooting to a 15-month high of 4.88 per cent in November, and factory output sliding in October on subdued performance by mining and manufacturing, government data showed on Tuesday.

The Central Statistics Office (CSO) released the two key macro economic data -- Consumer Price Index (CPI) for November and Index of Industrial Production (IIP) for October – Tuesday evening.

The CPI-based retail inflation jumped to 4.88 per cent in November on annual basis, as compared to 3.58 per cent in the preceding month.

The IIP, commonly known as factory output, continued to decline and fell to a three-month low of 2.2 per cent on annual basis in October mainly due to subdued performance of mining and manufacturing sectors coupled with a contraction in output of consumer durables. The IIP had expanded by 4.2 per cent in October last year.

Finance minister Arun Jaitley had said on Monday that the economic expansion recorded in the July-September period marks the reversal of the declining trend of growth witnessed in the last few quarters. Reversing a five-quarter slide in GDP growth, the Indian economy bounced back from a three-year low to expand by 6.3 per cent in the July-September quarter, compared to 5.7 per cent in the April-June period as manufacturing revved up and businesses adjusted to the new GST regime. The CSO data on CPI revealed that inflation in protein rich eggs shot to 7.95 per cent in November on annual basis, as against 0.69 per cent in the previous month. For vegetables it was 22.48 per cent in November. The inflation in the segment was a only 7.47 per cent in October.

On overall basis, the inflation in the food segment increased to 4.42 per cent in November as compared to 1.9 per cent in the preceding month.

In the fuel and light segment, it was 7.92 per cent, as against 6.36 in October.

The jump in retail inflation comes within days of the Reserve Bank warning that there may be a spike in prices in the coming months.

The central bank had also raised its inflation projection for the remaining months of the current fiscal while keeping the key interest rate (repo) on hold.

As for industrial production, when compared on a monthly basis, the IIP had grown 4.14 per cent in September this year.

Industrial output is up by a meager 2.5 per cent for the April-October period of the current fiscal, compared to 5.5 per cent in the same period of 2016-17.

Consumer durable goods output contracted by 6.9 per cent in October as against a growth of 1.5 per cent in the same month of the previous year. During the first seven months of this fiscal, the output of these goods declined by 1.9 per cent as against a growth of 6 per cent last year.

Electricity generation rose 3.2 per cent in October as compared to 3 per cent a year ago. The mining activity recorded almost a flat growth of 0.2 per cent during the month under review as against 1 per cent growth in October 2016.

Industry body Assocham said that manufacturing activity had slowed in October as inflows of new orders stagnated even as negative effects from the implementation of Goods and Services Tax (GST) continued to dampen demand levels.

Icra's Principal economist Aditi Nayar said the uptick in the CPI inflation was significantly sharper than expected, validating the caution displayed by the Monetary Policy Committee of the RBI in its recent reviews.

Read more: Business | Nation |

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