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Below Quote on IIP and CPI Numbers By Mr. Vivek Rathi, Director Research, Knight Frank India

“Inflation moderated to sub 5% in April 2023 primarily supported by a high base and softening of vegetable prices and energy prices. When measured sequentially, the consumer inflation has inched up by 0.5%. Despite a relative moderation across the categories, the inflation levels are still elevated impacting the discretionary spending of the households.

The wholesale prices have declined sharply in the last few years, however, the producers/manufacturers have not yet passed on this price reduction to the consumers, to maintain their profit margins, in the current high-cost environment. Thus, we expect the price pressure on the households to continue to remain sticky in the near term.

Softening of Industrial production growth in Mar 2023 is led by moderating growth in manufacturing output. However, the growth in capital and infrastructure/construction output continues to remain on the upside, indicating at an investment upcycle in the economy. The signals of recovery in domestic consumption is still uneven as the output of consumer durable goods is yet to pick up.

Consumer inflation level coming down to an 18-month low and will set the market expectations on RBI’s interest rate setting decision next month. So far, high interest rates have had a moderate impact on the housing market with affordable segment particularly taking major portion of the blow. If inflation rate trajectory gives some comfort to continue the decision on pause in this interest rate hike cycle, it will be the biggest comforting factor for the real estate industry.”

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