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Record low retail inflation of 1.54% shows macro-economic stability: CEA

Industrial output growth slumped to 1.7% in May

Press Trust of India  |  New Delhi 

Record low retail inflation of 1.54% shows macro-economic stability: CEA

The historically low level of at 1.54 per cent in June reflects the firm and ongoing consolidation of macro-economic stability, Chief Economic Adviser said on Wednesday, suggesting that all policy makers look at data "very, very carefully".

This "paradigm shift" in inflationary process has been missed by all, who have made "systematic inflation forecast error", he said, apparently referring to the which has kept the key policy rate unchanged so far this year citing pricing pressures.


He said that last time India saw such inflation -- according to a slightly different difference series (IW) -- was in 1999, and before that in August 1978.

"Clearly, this low number and what it implies about underlying price pressure -- as well as latest data on the just released -- is something that I am sure, all policy makers will reflect upon very very carefully," he told reporters.

Industrial output growth slumped to 1.7 per cent in May from 8 per cent a year-ago due to poor performance of mining and manufacturing.

"The latest number for June is 1.54 per cent and it is historically low and reflects the firm and ongoing consolidation of macro-economic stability," Subramanian said.

"This low, heartening number is consistent with our analysis for sometime now -- and which will be fully elaborated in the forthcoming survey -- of a paradigm shift in inflationary process to low levels of inflation -- a shift that I think has been missed by all reflected in large, one- sided and systematic inflation forecast error that have been made," he added.

hit a new level of 1.54 per cent in June on dip in food items like vegetables, pulses and milk products.

The Reserve Bank, which mainly factors in to arrive at its monetary policy, is slated to meet in early August to announce the next bi-monthly policy rate. The last policy review was in June.

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

First Published: Wed, July 12 2017. 21:12 IST
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