Retail inflation at annual low of 5.88%

New Delhi, December 12

The retail inflation dipped below 6 per cent for the first time this year in November but the industrial output in October contracted despite it being a festive season.

IIP at 26-month low

• Index of industrial production (IIP) contracted by 4 per cent in October, the sharpest fall in 26 months
• This was mainly due to decline in output of manufacturing and subdued performance of mining and power generation sectors

The consumer price index (CPI)-based inflation declined to 5.88 per cent in November, below the RBI’s upper tolerance level of 6 per cent for the first time in 11 months due to the softening of prices of food items, as per the data released by the National Statistical Office (NSO) on Monday.

The inflation rate was 6.77 per cent in October this year and 4.91 per cent in November last year.

The RBI has hiked benchmark interest rates by 2.25 per cent in five tranches since May to contain inflation.

The inflation in the food basket in November was 4.67 per cent against 7.01 per cent in the previous month. In December last year, retail inflation was 5.66 per cent, the last time it was below 6 per cent. Within the miscellaneous group, inflation was high in household goods, health, recreation, education and personal care.

Another set of statistics released by the government brought in disappointing news. The index of industrial production (IIP) contracted 4 per cent in October, mainly due to a decline in the manufacturing sector output and subdued growth in mining and power generation.

“The contraction in the consumer durables and non-durables index is a cause of worry. The IIP has also been non-consistent over the past few months. A steady and rising industrial output is key to an overall pick-up in economic growth,” said Millwood Kane CEO Nish Bhatt.

RBI Governor Shaktikanta Das had last week said the “worst of inflation is behind us” but had also cautioned that there was no room for complacency.

The RBI has projected headline inflation at an average of 6.7 per cent in 2022-23. In quarter four or from next month till March, it will average to a more tolerable 5.9 per

cent.