A decline in the inflation rate and a surge in the index of industrial production (IIP) would please markets and policymakers alike in normal circumstances. But economic indicators warrant careful interpretation in extraordinary times such as these. The latest data shows that the retail inflation rate moderated to 4.3 per cent in April, while industrial production in March went up by 22.4 per cent. Both the IIP and inflation numbers were impacted by a favourable base. Growth in industrial production will moderate in the coming months as the base effect of last year’s stringent lockdown fades. However, inflation outcomes would be influenced by a variety of factors. Both the government and the Reserve Bank of India (RBI) will need to be watchful to keep the pace of price rise within the tolerance limits.
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First Published: Thu, May 13 2021. 22:47 IST