IIP growth slowest in 8 months, retail inflation at 4-month high


New Delhi: Factory output grew 2.4% in November, the slowest pace of expansion in last eight months, while retail inflation rose to a four-month high of 5.7% in December 2023 on the back of a spurt in food prices, according to a set of government data released on Friday.
The retail inflation, based on Consumer Price Index (CPI), rose on account of spurt in prices of vegetables, pulses and spices.The inflation was 5.6% in November 2023 and 5.7% in December 2022. The rate of price rise in the food basket, which constitutes nearly half of the CPI, increased to 9.5% in December against 8.7% in the preceding month and 4.2% in December 2022, according to the data released by the National Statistical Office (NSO).

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“CPI inflation rose to a four month high… due to increase in food price inflation. Inflation in all the other components increased at a lower rate when compared to the previous month. The pick-up in inflation was driven by an unfavourable base effect of around 10 bps. The good thing is that CPI and core CPI remain in equilibrium long run relationship with CPI adjusting towards the core CPI, which has continued its downtrend from the last 12 months to reach 3.8% in December 2023. …We expect CPI inflation to come down to 5% by March 2023,” said Soumya Kanti Ghosh, chief economic adviser, SBI.
The deceleration in the growth of Index of Industrial Production (IIP) to the lowest level in current fiscal was on account of slowdown in manufacturing, which grew at 1.2% during the month compared to 6.7% a year ago. For October 2023, it was revised to 11.6% from provisional estimates of 11.7%. Industrial growth stood at 7.6% in November 2022.
The power generation growth also slowed to 5.8% in the month under review compared to 12.7% growth in the year-ago period. Mining growth came down to 6.8% in November 2023 from 9.7% growth a year ago.

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