Ind-Ra sees rise in retail inflation; industry output

Industrial production growth for October is expected to rise to 5.8 per cent while consumer price inflation for November is likely to rise past 5 per cent.
"Industrial production growth for October is estimated to rise to 5.8 per cent, the second best month in 2015-16 while consumer price inflation for November is estimated at 5.2 per cent, the highest in five months and wholesale price inflation is seen at (-) 2.5 per cent, the highest in five months," India Ratings and Research (Ind-Ra) said in a release.
The IIP growth momentum is likely to benefit from the base effect and continued inventory build-up in view of festive season, it said.

"The drivers of IIP in October are likely to be strong performance of the electricity sector (8.8 per cent), consumer durables and robust capital goods output is expected to strengthen IIP growth," it said.
On the price index side, Ind-Ra believes that inflation has been bottoming out. The inflation based on consumer and wholesale price indices have been inching up since August 2015 and September 2015 respectively, it said.
"Ind-Ra expects this trend to continue in November as well and forecasts CPI inflation to be 5.2 per cent and deflation in WPI to come down further to 2.5 per cent."

It said inflation in pulses and products has shown no respite and is likely to remain elevated in November too (June-October: 28.6 per cent).

"Although a higher acreage under pulses this fiscal is likely to ease their prices post kharif harvest, Ind-Ra feels it will still be insufficient to contain the spiralling pulse prices," it added.
Further, it said November is likely to be the 13th consecutive month in which Wholesale Price Index (WPI) inflation remains negative.
"The lower WPI deflation in November is likely to be due to the continued decline in fuel group deflation. Ind-Ra expects the WPI deflation to turn into inflation by early 2016, but will remain benign in the near term.