Retail inflation shoots up, factory activity sputters

RETAIL INFLATION BASED on consumer price index (CPI) rose to a four-month high of 5.69% in December, while industrial output growth as measured by the Index of Industrial Production (IIP) slowed to an eight-month low of 2.4% in November.

- PRIYANSH VERMA

Retail inflation jumped from 5.55% in November due to the statistical effect of a low base, data released by the National Statistical Office showed on Friday. The December print was, however, lower than market expectation of 5.9%.

Sequentially, the overall index fell 0.3% in December, the steepest pace in four months. The month-on-month decline in the consumer food price index (CFPI) was also the steepest in four months at 0.9%, but the inflation rate in December was at 9.53%, at a four-month high, purely due to a low base.

With the December print, CPI inflation in Q3FY24 averaged 5.4%, 20 basis points (bps) lower than the Reserve Bank of India's (RBI's) projection for the quarter.

If the headline inflation averages 5.2% in Q4FY24, as per the forecast, CPI inflation in the entire FY24 would average 5.4%, in line with the RBI's projection.

Core inflation stayed on its declining trajectory in December, coming in at 3.9% - the lowest rate in 48 months. This has, however, perplexed some economists.