Oct CPI inflation eases to 5.52%, Sept IIP stands at 2.5%

Moneycontrol Bureau

Inflation based on the Consumer Price Index (CPI) for the month of October eased to its all-time low of 5.52 percent, the lowest since India started computing consumer price index (CPI) in January 2012, triggered by lower food prices and fuel costs.

Meanwhile, the index for industrial output (IIP) for the month of September came in at 2.5 percent beating street estimate of 2 percent, against 0.4 percent in August.

Furthermore, the August IIP has been upwardly revised from 0.4 percent to 0.5 percent.

A CNBC-TV18 poll anticipated CPI-based inflation at 5.63 percent versus 6.46 percent on a month-on-month basis. 

Core inflation, which denotes prices for non-food and non-fuel items, came in at 5.85 percent compared to 5.9 percent in the previous month.

The decline in retail inflation is likely to sharpen calls for interest rate cuts by the Reserve Bank of India, as the RBI has set a target of bringing inflation down to 8 percent by January 2015 and 6 percent by January 2016. However, Governor Raghuram Rajan has admitted to upside risks on the latter target.

Concurring the view, Soumya Kanti Ghosh Chief Economic Advisor, SBI says, “We are at 5.45 percent and from that point of view, we are now clearly looking at sharp 7 percent CPI number as on mark 2015. That means 6 percent handle that we are is targeting on January 2016 should be reached earlier than expected.”

Breakup of the CPI components:

• Clothing, footwear, bedding inflation at 7.45 percent Vs 7.59 percent (MoM)
• Combined fuel, light inflation at 3.29 percent Vs 3.45 percent (MoM)
• Vegetable price inflation at -1.45 percent Vs 8.59 percent (MoM)
• Rural inflation at 5.52% Vs 6.68% (MoM)
• Urban inflation at 5.55% Vs 6.34% (MoM)
• CPI food inflation at 5.59% Vs 7.67% (MoM)

Breakup of the IIP components:

• Consumer goods growth at -4 percent Vs -6.9 percent (MoM)
• Consumer non-durables growth at 1.5 percent Vs -0.9 percent (MoM)
• Consumer durables growth at -11.3 percent Vs -15 percent (MoM)
• Intermediate goods growth at 1.8 percent Vs 0.3 percent (MoM)
• Capital goods growth at 11.6 percent Vs -11.3 percent (MoM)
• Basic goods growth at 5.1 percent Vs 9.6 percent (MoM)
• Electricity sector growth at 3.9 percent Vs 12.9 percent (MoM)
• Manufacturing sector growth at 2.5 percent Vs -1.4 percent (MoM)
• Mining sector growth at 0.7 percent Vs 2.6 percent (MoM) 

Posted by: Monishi Parekh