Perspective on IIP & CPI numbers By Ms. Rajani Sinha, Knight Frank India
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Below is perspective on IIP & CPI numbers by Ms. Rajani Sinha, Chief Economist & National Director – Research, Knight Frank India.
IIP
“While the sharp deceleration in IIP growth is mainly because of the base effect, even on a sequential basis the IIP has shown a decline and this is a cause of concern. While the infrastructure sector has shown a sequential decline, the silver lining is that on a MoM basis the consumer goods segment, specifically the consumer durables sector has shown a strong improvement. Going forward, for sustainable economic momentum in 2022, the critical driver would be boost to consumer spending through demand stimulating government policies. Eventually private investment will also improve as capacity utilization level improves going forward”.
CPI
“While CPI is at a comfortable level around 4%, inflationary concerns persist with high core inflation. While the cut in excise duty on petrol/ diesel will provide reprieve to inflation, high global commodity prices including energy prices, pose a threat for future inflation. Even with economies bouncing back to normalcy, some of the supply bottlenecks are still lingering and to add to that there is threat of demand side pressure on inflation gathering strength. Globally also the threat of inflation is surging because of supply bottlenecks and high commodity prices. While RBI will be cautious of inflationary threat, the Central Bank is likely to be gradual in its policy normalization under the current circumstances”.
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