Economy     

Published: June 15, 2024
Updated: June 15, 2024

Retail inflation at 12-month low

Retail inflation in India has reached a 12-month low of 4.75% in May 2024, according to the latest data from the Ministry of Statistics and Programme Implementation. This marks a slight decline from the 4.83% recorded in April 2024. The headline inflation rate has remained under 5% for three consecutive months since March 2024.

The Consumer Price Index (CPI) inflation for May 2024 shows a year-on-year rate of 4.75%. This breaks down further into rural inflation at 5.28% and urban inflation at 4.15%. The data indicates a continuous moderation in headline inflation from 5.1% in February to 4.8% in April.

Inflation within the food basket stood at 8.69% in May, marginally lower than the 8.70% in April. Despite the high level of food inflation, it remained unchanged compared to the previous month.

The Reserve Bank of India (RBI) has been tasked with keeping CPI inflation at 4%, with a margin of 2% on either side. Earlier this month, the RBI projected CPI inflation for 2024-25 at 4.5%, forecasting 4.9% in Q1, 3.8% in Q2, 4.6% in Q3, and 4.5% in Q4.

I.I.P. GROWS

India’s industrial production, measured by the Index of Industrial Production (IIP), grew by 5% in April 2024. This is an improvement from the 4.6% growth in April 2023. The mining, manufacturing, and electricity sectors saw growth rates of 6.7%, 3.9%, and 10.2% respectively.

Within the manufacturing sector, notable growth was observed in

  • % Basic metals (8.1%).
  • % Coke and refined petroleum products (4.9%).
  • % Motor vehicles, trailers, and semi-trailers (11.4%).

The IIP for April 2024, with a base year of 2011-12, stands at 147.7, compared to 140.7 in April 2023. The indices for different categories are:

1. Primary Goods: 152.2

2. Capital Goods: 95..3

3. Intermediate Goods: 156.9

4. Infrastructure/Construction Goods: 183.3

5. Consumer Durables: 118.7

6. Consumer Non-Durables: 151.0

Aditi Nayar, Chief Economist at ICRA Ltd, noted that the unexpected ease in headline CPI inflation was driven by a lower-than-anticipated print for the food and beverages group. She highlighted that although food and beverages inflation remained high at 7.9%, several subgroups saw a cooling in their inflation rates.

MONSOON FACTOR

Murthy Nagarajan, Head of Fixed Income at Tata Asset Management, commented that the CPI inflation figure of 4.75% was slightly lower than market expectations. He emphasized the need for a good and normal monsoon distribution to help reduce food inflation further, given the rising global food prices.

The drop in retail inflation to a 12-month low in May 2024 is a positive sign for the Indian economy, indicating potential stabilization. However, high food inflation and external factors such as global food prices and monsoon patterns will continue to play a crucial role in the country’s inflation dynamics.

September 30, 2024 - Second Issue

Industry Review

VOL XVI - 03
September 16-30, 2024

Formerly Fortune India Managing Editor Deven Malkan Assistant Editor A.K. Batha President Bhupendra Shah Circulation Executive Warren Sequeira Art Director Prakash S. Acharekar Graphic Designer Madhukar Thakur Investment Analysis CI Research Bureau Anvicon Research DD Research Bureau Manager (Special Projects) Bhagwan Bhosale Editorial Associates New Delhi Ranjana Arora Bureau Chief Kolkata Anirbahn Chawdhory Gujarat Pranav Brahmbhatt Bureau Cheif Mobile: 098251-49108 Bangalore Jaya Padmanabhan Bureau Chief Chennai S Gururajan Bureau Chief (Tamil Nadu) Ludhiana Ajitkumar Vijh Bhubaneshwar Braja Bandhu Behera

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