Retail inflation cools, factory output soars

Sep inflation eases to 5.02%; industrial output rises 10.3% in Aug

- Rhik Kundu & Ravi Dutta Mishra

India's economy received a dual boost as retail inflation cooled in September, retreating within the central bank's comfort zone. Simultaneously, factory output surged into double-digit growth territory in August, scaling a 14-month high, indicating an upswing in economic momentum.

Consumer Price Price Index (CPI)-based inflation eased for the second consecutive month in September to 5.02%, aided by a slower rise in vegetable prices, official data showed on Thursday. Separately, data from the statistics ministry showed factory output grew 10.3% in August, though in part, influenced by a statistical effect.

Cooling inflation and a pick-up in factory output, especially in capital goods, regarded as a proxy for investments in the economy, is welcome news for policymakers and companies that are grappling with high borrowing costs and a slump in export markets.

Retail inflation moderated from 6.83% in August and a 15-month high of 7.44% in July, meeting the Reserve Bank of India's (RBI) target range of 4-6% during September. A Mint poll of 18 economists estimated retail inflation to slow to 5.4% in September.