New Delhi: In a double whammy on the economic front for the Narendra Modi government, India’s retail inflation rose sharply to a 15-month high of 4.88 per cent in November from 3.58 per cent in the previous month, while industrial production fell to a three-month low of 2.2 per cent in October from 3.8 per cent in September.
A rising inflation, mainly due to a costlier fuel, vegetables and eggs, and slowing industrial production is bad news for the Modi government at a time it is desperately looking for a turnaround in the economy especially after the demonetisation and the GST jitters.
The Central Statistics Office data on consumer price index 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.
In Delhi, eggs are selling at Rs 7 a piece as against Rs 5 a piece a couple of months ago.
Retail inflation rises, industrial output falls
A rising inflation and slowing industrial production is a bad news for the Modi government when it was looking for a turn around in the economy after being hit by demonetisation and GST jitters.
Retail inflation based on consumer price index breached the RBI’s medium-term target of 4 per cent. Earlier this month, RBI had refused to cut interest rates on fear of increase in inflation despite pleas from the industry. Hardening inflation means that RBI is unlikely to go for any interest rate cut in the current fiscal.
The concern is that the jump in retail inflation was led by foods prices which increased to 4.42 per cent in November against 1.9 per cent in the preceding month hitting the common man.
The vegetable prices jumped by 22.48 per cent in November and prices of protein rich eggs shot to 7.95 per cent. Fuel inflation jumped to 7.92 per cent in November due to increase in international crude oil prices.
“The hardening of retail inflation in November 2017 was broad-based, with negative surprises not restricted only to food items, but posted by many of the sub-groups. For instance, core inflation recorded a broad-based uptick to an eight-month high 4.9 per cent in November 2017 from 4.6 per cent in October 2017,” said Aditi Nayar, principal economist at Icra.
Meanwhile, industrial output came down to a 3-month low of 2.2 per cent in October after putting in two consistent months of healthy growth — 4.5 per cent on-year in August and 4.1 per cent in September.