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| Edited By: |Source: DNA |Updated: Dec 13, 2017, 01:50 AM IST
The surge in retail inflation in November to a 15-month high of 4.9%, up from 3.9% in October, riding an increase in foods and oil prices, is enough to make the Reserve Bank of India (RBI) nervous. The inflation has soared beyond what the central bank predicted last week. RBI’s Monetary Policy Committee had forecast a range of 4.3-4.7% for retail inflation for the quarter ended December and March, higher than the previous projection of 4.2-4.6%.
What is worrying is that the leap was broad-based, driven mainly by a rise in food inflation, fuel inflation on the back of higher global oil prices, and a pick-up in core inflation reflecting the impact of payment of higher house rent allowances. Retail inflation, which rose 3.63% in November, 2016, had fallen to 1.5% in June, before steadily moving up to a seven-month high of 3.58% in October, 2017.
On the flip side, the Index of Industrial Production (IIP), popularly known as factory output, continued to decline and fell to a three-month low of 2.2% in October, thanks to subdued performance of mining and manufacturing sectors. The IIP had expanded by 4.2% in October last year. The average IIP figure for first seven months (April-October) stands at a meagre 2.5%, compared to 5.5% growth a year ago.
