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Below The Reaction quote on today`s IIP & CPI Data release By Mr. Shlok Srivastav, Co-founder & COO, Appreciate, a fintech platform for Savings and investment

CPI data

As expected, with September’s retail inflation standing at 5%, inflation has finally been brought back to within the RBI’s ideal 2-6% band. This cooling has been partly precipitated by major corrections in vegetable prices. Nevertheless, the near-term picture is less clear when it comes to cereals, spices, and pulses, mainly due to uncertain weather conditions, the current geopolitical situation, and global shortages.

In addition, the oil situation also looks hazy going forward: while prices were initially on the rise due to supply shocks, they could now rise further due to second-order effects of the unexpected Israel-Palestine conflict. Any oil price hikes will have an impact on the non-food component of inflation.

IIP data

With industrial output growth soaring from 5.7% in July to 10.3% in August, India Inc. seems to be doing something very right. The turnaround of the mining sector, which posted a growth of 12.3% after having contracted 3.9% in August 2022, stands out in particular. Manufacturing and electricity outputs have also grown considerably on a YoY basis.

Nevertheless, for the April-August period, beverages (0.7%), leather products (0.2%), wearable apparel (-22.6%), paper products (-4.6%), and several other kinds of products have seen poor manufacturing growth rates. If these sectors can also get back up on their feet soon, we could see surprisingly high overall growth in the near future.

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