Perspective on IIP and CPI numbers By Ms. Rajani Sinha, Knight Frank India
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Below is perspective on IIP and CPI numbers by Ms. Rajani Sinha, Chief Economist & National Director – Research, Knight Frank India.
IIP
“The deceleration in IIP growth number for November 2021 is definitely a cause of concern. On a sequential basis, the Index of Industrial production has fallen by around 4% when compared to the previous month. There has been specifically very sharp fall on a sequential basis (MoM) in the consumer durables segment. As indicated by some of the other economic indicators also, the growth momentum in the month of November seems to be flattening. Going forward, in the next few months we could see further weakening of the growth momentum as the economy grapples with Omicron concerns and supply disruptions. The latest economic indicators are pointing towards urgent need of demand stimulation measures to sustain the economic recovery. In the upcoming Union Budget, the Government should look at measures to boost private consumption, which can be the bellwether of India’s economic recovery.
CPI
“At 5.6%, the CPI inflation has reached very close to RBI’s upper band of inflation tolerance. The surge in inflation in December was expected with the high base effect wearing off. Core inflation above 6% remains a cause of concern for the Central Bank. Even with inflationary concerns persisting, RBI is likely to be cautious and gradual in its monetary policy normalization, given the uncertainties around COVID situation and fragile economic growth scenario”.
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