Retail inflation eases to 4.35% in Sept; IIP grows 11.9% in August

This marks the third consecutive month within the Reserve Bank of India's inflation tolerance band of 2%-6%.

India's retail inflation eased again in September, falling to a five-month low, thanks to a favourable comparison with last year and moderating food prices that offset a surge in the cost of crude oil and fuel, government data showed on Tuesday. 

Consumer price inflation fell sharply to 4.35% in September from 5.3% in August. This marks the third consecutive month within the Reserve Bank of India's (RBI) tolerance band of 2%-6%. The Consumer Price Index-based (CPI) inflation was at 7.27% in September 2020.

As per the data released by the National Statistical Office (NSO), the inflation in food basket eased to 0.68% in September 2021, significantly down from 3.11% in the preceding month.

The Reserve Bank of India (RBI), which mainly factors in CPI-based inflation while arriving at its bi-monthly monetary policy, has been tasked by the government to keep it at 4%, with a tolerance band of 2% on either side.

Last week, RBI Governor Shaktikanta Das had said that overall, the CPI headline momentum is moderating, which combined with favourable base effects in the coming months could bring about a substantial softening in inflation in the near term.

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

The Index of Industrial Production has risen 11.9% year-on-year for the month of August as against 11.5% in July, fresh data showed.

As per the Index of Industrial Production (IIP) data by the National Statistical Office (NSO), the manufacturing sector's output surged 9.7% in August 2021.

In August, the mining output climbed 23.6%, and power generation increased 16%. The IIP had contracted 7.1% in August 2020.

During April-August this year, the IIP grew 28.6% against a 25% 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%.

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