NEW DELHI: After staying above RBI’s tolerance band for most of the year, retail inflation fell sharply to an 11-month low at 5.88% in November, against 6.77% in the previous month, thanks to cooling of food prices. Food inflation dropped to 4.67% in November compared with 7.01% in October.
This is the first time in 2022 that consumer price inflation has come below the Reserve Bank of India’s upper limit of 6%. The banking regulator has been taking hard steps to tame inflation, having increased repo rate by 225 basis points since May.
While food, clothing and footwear and housing inflation declined in November, inflation of other commodity groups – pan, tobacco and intoxicants, fuel and light and miscellaneous products is still high. Core inflation surged to 6.04% in November.
The central bank projected inflation to remain above 4% for the next 12 months. RBI Governor Shaktikanta Das, last week, in his monetary policy speech said, “The worst of inflation is behind us, but there is no room for complacency in the fight against price rise. We will keep ‘Arjuna’s eye’ on the evolving inflation dynamics.”
IIP slips to 26-month low
India’s industrial production contracted by 4% in October, the sharpest fall in 26 months, mainly due to a decline in the output of manufacturing and the subdued performance of the mining and power generation sectors. In contrast, the Index of Industrial Production had grown 3.3% in the same month last year. In September 2022, IIP had grown by 3.1%. The contraction was mainly due to a decline in manufacturing, which witnessed a sharp contraction of 5% year-on-year. This year, IIP grew by 5.3% till October