New Delhi: Retail inflation picked up in August on higher food prices, reversing a three-month downward trend and staying above the Reserve Bank of India’s (RBI) upper tolerance level of 6% for the eighth consecutive month, indicating that The central bank may again raise interest rates.
Data released by the National Statistical Office (NSO) on Monday showed retail inflation, as measured by the Consumer Price Index (CPI), rose 7% yearly in August, up from 6.7% in July and August 2021. Food inflation rose to 7.6 per cent from 6.7 per cent in the previous month, driven by an increase in prices of cereals, vegetables, milk and milk products by over 5.30% in the previous month. Rural inflation was 7.2%, which was 6.7% higher than urban. Rural food inflation was 7.6% while urban was 7.5%, the data showed.
Separate data released by the NSO showed industrial output growth in July fell to a four-month low of 2.4%, from 12.7% in the previous month and lower than the 11.5% growth recorded in July 2021. This was largely driven by contraction in mining. and slowing activity in manufacturing and power and fading from the base effect.
Retail inflation data showed that cereals and produce prices rose 9.6% in August, while vegetable prices rose 13.2 per cent during the month. Fuel and light prices stood at 10.8% and core inflation, minus food and fuel, was 5.9%.
The Finance Ministry said that despite an uncertain monsoon and negative weather in vegetable prices, food inflation in August is lower than the peak of April of the current year. “With global inflationary pressures, India’s inflation expectations remain stable, with stable inflation,” the finance ministry said on microblogging site Twitter.
Inflation has emerged as a major policy challenge across the world. The RBI has raised rates three times to rein in inflationary pressures and economists said a return to retail inflation to 7% in August would prompt the central bank to raise interest rates again in the monetary policy review later this month. can be inspired.
“From a policy perspective, we expect the RBI to increase policy rates by 50 basis points in its upcoming policy as inflation risks continue. In addition, with aggressive tightening by global central banks (the ECB hiked rates by 75 basis points and irrigated The RBI may be asked to continue raising its rates as a hedge against the rupee. HDFC bank Said in a note.
IIP Data showed the capital goods sector, a key gauge of industrial activity, slowed from 30.3% in July 2021 to 5.8% in July, while the consumer non-durables sector contracted 2% during the month. “The impact of slowing global growth is beginning to be felt by domestic manufacturing. Major export sectors such as textiles, petroleum products, machinery and equipment saw a gradual decline in IIP in July. This may pick up in the next 12 months, as aggressive monetary tightening and increased inflation weighed on demand prospects in major advanced economies,” said DK JoshiChief Economist of rating agency Crisil.
“Domestic demand has also not supported manufacturing. IIP for both consumer durables and non-durables declined sequentially in July. This may be the result of a shift in demand for services from manufacturing. There was also a moderation in infrastructure and construction activities, which shows that capex activity is yet to see a strong pickup,” Joshi said.
Data released by the National Statistical Office (NSO) on Monday showed retail inflation, as measured by the Consumer Price Index (CPI), rose 7% yearly in August, up from 6.7% in July and August 2021. Food inflation rose to 7.6 per cent from 6.7 per cent in the previous month, driven by an increase in prices of cereals, vegetables, milk and milk products by over 5.30% in the previous month. Rural inflation was 7.2%, which was 6.7% higher than urban. Rural food inflation was 7.6% while urban was 7.5%, the data showed.
Separate data released by the NSO showed industrial output growth in July fell to a four-month low of 2.4%, from 12.7% in the previous month and lower than the 11.5% growth recorded in July 2021. This was largely driven by contraction in mining. and slowing activity in manufacturing and power and fading from the base effect.
Retail inflation data showed that cereals and produce prices rose 9.6% in August, while vegetable prices rose 13.2 per cent during the month. Fuel and light prices stood at 10.8% and core inflation, minus food and fuel, was 5.9%.
The Finance Ministry said that despite an uncertain monsoon and negative weather in vegetable prices, food inflation in August is lower than the peak of April of the current year. “With global inflationary pressures, India’s inflation expectations remain stable, with stable inflation,” the finance ministry said on microblogging site Twitter.
Inflation has emerged as a major policy challenge across the world. The RBI has raised rates three times to rein in inflationary pressures and economists said a return to retail inflation to 7% in August would prompt the central bank to raise interest rates again in the monetary policy review later this month. can be inspired.
“From a policy perspective, we expect the RBI to increase policy rates by 50 basis points in its upcoming policy as inflation risks continue. In addition, with aggressive tightening by global central banks (the ECB hiked rates by 75 basis points and irrigated The RBI may be asked to continue raising its rates as a hedge against the rupee. HDFC bank Said in a note.
IIP Data showed the capital goods sector, a key gauge of industrial activity, slowed from 30.3% in July 2021 to 5.8% in July, while the consumer non-durables sector contracted 2% during the month. “The impact of slowing global growth is beginning to be felt by domestic manufacturing. Major export sectors such as textiles, petroleum products, machinery and equipment saw a gradual decline in IIP in July. This may pick up in the next 12 months, as aggressive monetary tightening and increased inflation weighed on demand prospects in major advanced economies,” said DK JoshiChief Economist of rating agency Crisil.
“Domestic demand has also not supported manufacturing. IIP for both consumer durables and non-durables declined sequentially in July. This may be the result of a shift in demand for services from manufacturing. There was also a moderation in infrastructure and construction activities, which shows that capex activity is yet to see a strong pickup,” Joshi said.