Asia’s third largest economy, India’s
retail inflation fell to a three year low of 5.52% in October and industrial
output rebounded to 2.5% in September.
The more than one percentage point drop
in inflation rates over September’s 6.4 per cent might help to bring down
prices of essentials and rekindling hopes that cooling prices will nudge the
RBI to cut lending rates leading to lower EMIs in its monetary policy next
month, analysts said.
They added that oil companies may cut
further petrol and diesel on plunging global crude oil costs, a move that will
aid government's efforts to keep inflation low and stable.
The Index of Industrial Production (IIP)
surged in September from a flat 0.4% growth in the previous month buoyed by
robust power and capital goods output.
Capital goods output, a proxy for
investment activity, grew 11.6% in September mirroring that companies may have
begun to add capacity lines expecting demand for goods to pick up.
The manufacturing sector, which
constitutes over 75% of India’s total industrial output, grew 2.5% in September
compared to a growth of 1.4% a year ago.
The fall in retail inflation measured by
the consumer price index was driven by a fall in food inflation to 5.59% In
October from 7.67%. Inflation fell in vegetables, which accounts more than a
tenth of the food basket, contracted 1.45%.
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