Dec retail inflation rises to 6-month high of 5.59%; Nov IIP growth at 1.4%

Higher telecommunications charges and food prices, along with a comparatively low base one year ago, drove Indian retail inflation to a six-month high of 5.59% in December, showed government data on Wednesday. This is closer to RBI's upper tolerance limit of 6%.

The Consumer Price Index (CPI) based retail inflation was 4.91% in November 2021 and 4.59% in December 2020.

As per the data released by the National Statistical Office (NSO), food inflation rose to 4.05% in December this fiscal compared to 1.87 per cent in the preceding month.

The RBI left its repo rate unchanged at 4% for a ninth consecutive policy meeting last month, sticking to its focus on economic growth as India still faces challenges from the coronavirus pandemic.

The Index of Industrial Production decreased in November to 1.4% as supply shortages continued to haunt factory production.

Industrial output grew 3.2% in October, and had contracted 1.9% in November 2020.

The Reserve Bank, which mainly factors in the retail inflation while arriving at its bi-monthly monetary policy, expects the inflation print to be somewhat higher over the rest of the year as base effects turn adverse.

According to the RBI, it is expected that headline inflation will peak in the fourth quarter of the current fiscal and soften thereafter.

As per the Index of Industrial Production (IIP) data by the National Statistical Office (NSO), the manufacturing sector's output grew 0.9% in November last year.

In November 2021, the mining output climbed five%, and power generation increased 2.1%.

During April-November this fiscal, the IIP grew 17.4% against a 15.3% contraction in the same period last year.

Industrial production has been hit due to the coronavirus pandemic since March 2020, 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.

With inputs from PTI