How were the Indian inflation numbers and IIP growth numbers announced on 12th May?

For March 2022, IIP was up by 1.85%, which is higher than the revised IIP growth estimate of 1.46% for February 2022. The bottleneck for an IIP revival is still manufacturing growth which remains tepid at 0.9%. Incidentally, May 2022 marks the fifth month when the IIP has remained below 2%. The big news was that the high frequency MOM IIP was up 12.5%. Supply chain constraints are still pronounced with continued lockdowns in China as well as an overhang of the Russia Ukraine war.

Let me now turn to the inflation story. At 7.79%, inflation for April 2022 was well above the Reuters consensus estimate. The bigger shocker in April was core inflation touching a 8-year high of 7.24%. The other big worry is rural inflation higher at 8.4% and food inflation at 8.38% despite promise of a robust Rabi crop. RBI has hiked repo rates by 40 bps and CRR by 50 bps in an unscheduled MPC meet in May. Looking at inflation, more rounds of rate hikes look very likely and could start as early as June 2022.