Retail inflation at 8-month high in September; August IIP in negative zone

Days after the Reserve Bank of India (RBI) predicted gradual easing of retail inflation, consumer price index-based inflation for September came in at 7.34 per cent, from 6.69 per cent in the previous month on account of rising food prices. This marks the highest level recorded in eight months, and well above the RBI’s target range of 2-6 per cent. Though moderation is expected after the kharif harvest, an uptick in inflation when economic recovery is underway is troublesome. Food inflation at 10.68 per cent in September, against 9.05 per cent in the previous month, is the crux of worry.

Another key barometer of the economy, the Index of Industrial Production declined 8 per cent in August. Industrial activity bore the brunt of localised lockdowns and work restrictions in August, chipping away nearly a tenth of the factory output.