The continuous price rise of some food products and firm demand during the festival season pushed the retail inflation up to a four-month high in October and climbed to 5 per cent in the same month, while industrial production slackened to a four-month low of 3.6 per cent in September. However, economists feel that if such trend continues, there may be less likely that the central bank will cut interest rates at its policy review next month, thereby reflecting that the growth of economy in the country may not be still out of the woods.
The retail inflation rose to four-month high of 5 per cent in October compared with 4.41 per cent in September this year and 4.62 per cent in October 2014, according to Consumer Price Index (CPI).
The retail inflation in pulses and products category also rose to a staggering 42.20 per cent in October. While the price rise in the food and beverages category was at 5.34 per cent in October, inflation in cereals and products was also higher at 1.46 per cent.
Similarly, the Central Statistics Office (CSO) showed that index of industrial production (IIP) or industrial output grew at 3.6 per cent in September compared to 2.6 per cent in the same month last year, mainly because of subdued performance of the manufacturing sector.
As Reserve Bank of India (RBI) takes into account retail inflation while formulating monetary policy, the central bank's retail inflation target is around 5.8 per cent by January 2016 and around 6 per cent by the end of March 2016. However, economists had predicted consumer prices would rise 4.82 per cent in October from a year earlier, faster than September's 4.41 per cent increase, but still below the RBI's January 2016 target.
However, India Inc feel that the growth of country's economy still under pressures with variety of challenges. "Two key macro indicators clearly point out that the economy still faces several tough challenges," industry body's Assocham Secretary General DS Rawat said, adding that an effective strategy to deal with the situation is required so that the headline number does not convey an impression of inflation returning.
"This will be the last set of macro data this year RBI will consider before it heads into its policy review due in December," he added.
On the other hand, industrial output had grown by 2.6 per cent in September last year. Meanwhile, the factory output was revised slightly downwards to 6.2 per cent for August, from the provisional estimate of 6.4 per cent earlier. IIP stood at 4 per cent in April-September 2015 against 2.9 per cent in the year-ago period.
As far as price rise in consumer items are concerned, retail inflation in vegetables and fruits stood at 2.42 per cent and 1.98 per cent respectively in October. However, among other protein rich items such as meat and fish, the rate of price rise has slowed to 5.01 per cent.
likewise, rate of retail price rise in milk and its products was 4.79 per cent. During the month, eggs also turned cheaper at 0.59 per cent. As per the data from the Ministry of Statistics and Programme Implementation (MOSPI), inflation in sugar and confectionery category remained in negative zone at (-) 10.47 per cent.
The price rise in spices category was higher at 9.82 per cent and for non-alcoholic beverages at 4.31 per cent. In the rural areas, retail inflation rose to 5.54 per cent and for urban sector it was at 4.28 per cent.