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Below the Perspective on IIP CPI by Ms. Anitha Rangan, Economist, Equirus

“A meaningful easing in CPI inflation to 5.02% though not broad based is comforting after the heightened two months of high single digits. Notably, the thrust is from fuel and light, which is negative (government’s easing of LPG prices), and vegetables which eased to just 3.4% from the 26% levels of August. Edible oil also contributed to the decline. On the other side, cereals (11%), pulses (16%), spices (23%) maintain their pace of increase. With uneven monsoon and several states reporting a possibility of a sub-par kharif crop, food inflation outlook remains grim. While 5% is reached, the task downhill to the 4% will remain a challenge in the near future.

Growth on the other side continues to show resilience with IIP at 10.3%. However within this, consumer durables continues to lag with a decline while all other categories post robust growth, suggesting that recovery still has some steam left.

Until robust recovery continues and food inflation trajectory shows uncertainty policy rates could remain status quo, while yields impacted by other factors (global, domestic viz. fiscal, OMO sales, liquidity) could remain elevated”.

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