Finance Minister Arun Jaitley and RBI Governor Urjit Patel (Getty Images)
Finance Minister Arun Jaitley and RBI Governor Urjit Patel (Getty Images)

Economy

Budget 2018: Index Of Industrial Production (IIP) Rises 8.4% But So Does Inflation, To 5.21%

Team Republic |

Hack:

  • Retail inflation rose to 5.21% in December, crossing the RBI's 4% ± 2% comfort band, the CSO revealed on Friday
  • Index of Industrial Production (IIP), however, rose 8.4% in November

Retail inflation crossed the RBI's comfort level and rose to 5.21% in December on rise in prices of food items, egg and vegetables, dashing hopes of interest rate cut in the near future.

The retail inflation, based on Consumer Price Index (CPI), was 4.88% in November. In December 2015, it was 3.41%.

The Reserve Bank has been asked by the government to keep inflation at 4%, plus or minus 2%, and its rise beyond the comfort zone will put pressure on the central bank not to cut interest rate (repo rate).

As per the data released by the Central Statistics Office (CSO), inflation for the food basket increased to 4.96% in December from 4.42% in the preceding month.

The data revealed that eggs, vegetables and fruits became costlier, while inflation moderated in case of cereals and pulses.

Meanwhile, Industrial production grew 8.4% in November 2017, compared to 5.1% a year ago.

Here's what the CSO says:

"The General Index for the month of November 2017 stands at 125.6, which is 8.4% higher as compared to the level in the month of November 2016. The cumulative growth for the period April-November 2017 over the corresponding period of the previous year stands at 3.2%.

"In terms of industries, fifteen out of the twenty-three industry groups (as per 2-digit NIC-2008) in the manufacturing sector have shown positive growth during the month of November 2017 as compared to the corresponding month of the previous year." 

(With PTI inputs) 

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