Oct retail inflation rises marginally to 4.48%; Sept IIP slows to 3.1%

This marks the fourth consecutive month inflation has been within the Reserve Bank of India's tolerance band of 2%-6%

India's retail inflation in October rose marginally to 4.48 per cent due to uptick in food prices, leaving the Reserve Bank of India room for now to leave interest rates steady, government data showed on Friday.

The inflation, as measured by the consumer price index (CPI), was 4.35 per cent in September. This marks the fourth consecutive month inflation has been within the RBI's tolerance band of two per cent-six per cent.

According to the data released by the National Statistical Office (NSO), inflation in food basket rose to 0.85 per cent in October, compared to 0.68 per cent in the preceding month.

Vegetable prices, especially key ingredients in Indian cooking like onions and tomatoes, rose sharply after unseasonal rains damaged produce last month. Global oil prices rallied during the month, which pushed up petrol prices.

Meanwhile, the base effect which was giving good industrial production numbers for past few months lost its sheen with September index of industrial production decelerating in YoY terms to 3.1 per cent from 11.9 per cent YoY in August, government data showed on Friday.

The deceleration in September IIP numbers was largely on account of normalisation of base effect. 

The October inflation data will be the last before the RBI's rate-setting panel meets Dec. 6-8, where it is widely expected to leave the repo rate unchanged at four per cent.

The RBI is expected to first raise its reverse repo rate by 25 basis points in January-March, followed by a 25 basis point rise in the repo rate to 4.25 per cent in the April-June quarter, according to a Reuters poll.

The RBI has projected the CPI inflation at 5.3 per cent for 2021-22: 5.1 per cent in second quarter, 4.5 per cent in third; 5.8 per cent in last quarter of the fiscal, with risks broadly balanced.

The retail inflation during April-June period of 2022-23 is projected at 5.2 per cent.

As per the Index of Industrial Production (IIP) data by the National Statistical Office (NSO), the manufacturing sector's output surged 2.7 per cent in September 2021.

In September, the mining output climbed 8.6 per cent, and power generation increased 0.9 per cent.The IIP had grown by one per cent in September 2020.

During April-September this year, the IIP grew 23.5 per cent against a 20.8 per cent contraction in the same period last year.

Industrial production has been hit due to the coronavirus pandemic since March last year when it had contracted 18.7 per cent.

It shrank 57.3 per cent in April 2020 due to a decline in economic activities in the wake of the lockdown imposed to curb the spread of coronavirus infections.