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Published: April 13, 2024
Updated: April 13, 2024

India's Economic Update: Inflation Edges Below 5% as Industrial Output Surges by 5.7%

Steady Inflation Trends Amidst Strong Factory Performance

Retail inflation in India remained above 4% for the entirety of FY24, with a slight dip to 4.85% in March from the previous month's 5.09%. Despite persistent concerns over food inflation, economic indicators show resilience, with the index of industrial production (IIP) reaching a robust 5.7% growth in February.

Central Bank's Caution Amidst Growth Optimism

The Reserve Bank of India (RBI) maintains an optimistic growth projection of 7% for the fiscal year, yet remains vigilant regarding inflation, projected at 4.5% for the year and 4.9% for the first quarter. Governor Shaktikanta Das emphasizes the need for sustained inflation control measures.

Market Response and Analyst Insights

Analysts anticipate a cautious approach from the RBI, with little expectation for a rate cut given current market dynamics. Food and beverage inflation persist above 7%, prompting concerns over monetary policy adjustments. However, strong factory output suggests underlying economic strength.

Future Outlook: Balancing Growth and Inflation

While industrial output continues to show promise, challenges remain in curbing inflationary pressures, particularly in the food sector. The RBI's approach to monetary policy adjustments will likely hinge on balancing growth objectives with inflation containment measures.