New Delhi, September 12, 2023: India’s retail inflation exhibited a notable decline in August, dropping to 6.83 per cent after reaching a 15-month peak in July. However, it still hovers above the upper tolerance threshold set by the Reserve Bank of India (RBI) at 6 per cent.
Data released by the Ministry of Statistics and Programme Implementation on September 12 revealed that India’s Consumer Price Index (CPI) inflation saw a decrease from the July peak of 7.44 per cent. While this marks a positive shift, it is important to note that retail inflation continues to remain elevated, raising concerns for policymakers.
Food Inflation Eases:
One of the key factors contributing to the decline in CPI inflation was a decrease in food prices, which account for nearly half of the overall CPI basket. In August, food inflation stood at 9.94 per cent, down from a rise of 11.51 per cent in July. Food prices have been a source of persistent concern for policymakers due to erratic weather conditions impacting the production of essential items such as vegetables, milk, and cereals.
Industrial Production Surges:
In contrast to the inflation trend, India’s industrial production witnessed a significant rise in July. Official data released on Wednesday indicated that industrial production in the country increased by 5.7 per cent during the same month. The Quick Estimates of the Index of Industrial Production (IIP) for July 2023, with a base year of 2011-12, was recorded at 142.0.
Sectoral Breakdown:
Mining: 111.9
Manufacturing: 141.2
Electricity: 204.0
The IIP is categorized by use-based classification, with indices as follows:
Primary Goods: 141.7
Capital Goods: 101.6
Intermediate Goods: 151.8
Infrastructure/Construction Goods: 168.5
Consumer Durables: 118.1
Consumer Non-durables: 152.2
Data Revisions:
Alongside the Quick Estimates for July 2023, revisions were made to the indices for June 2023 (first revision) and April 2023 (final revision) based on updated data received from source agencies. These revisions were carried out with weighted response rates of 94 percent and 95 percent, respectively.
The release of the Quick Estimates of IIP takes place on the 12th of each month, with a lag of six weeks, and is compiled using data collected from source agencies, which, in turn, gather data from manufacturing facilities and establishments.
India’s Retail Inflation Eases to 6.83% in August but Remains Above RBI’s Tolerance Band, Industrial Production Surges
