InvestorQ : What is your view on the inflation and IIP data that was announced by the government on 12 November?
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What is your view on the inflation and IIP data that was announced by the government on 12 November?

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Niti Shenoi answered.
6 months ago
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Here is what you need to know about the inflation and IIP announcement on 12 November for the months of October and September 2020 respectively.

· IIP for Sep-20 gave some hope but Oct-20 retail inflation went up further. It must be recollected that the IIP turned positive after a gap of 7 months.

· While manufacturing which is 77.6% of the IIP was just about flat, mining and agriculture showed good traction. Overall IIP growth was up 0.24%.

· It broadly indicates that industrial output is gradually getting back to pre-COVID levels and that has already been hinted by the core sector and PMI numbers.

· However, there are some distinct worries over CPI inflation which went higher to almost 7.7% for the month of October.

· Of course, like in most of the previous months, it was food inflation that set the trend with vegetable inflation playing truant in a big way.

· What is also a lot more disconcerting is that the core inflation, which excludes food and oil, has also inched up further to 5.8% and that is worrisome as it is stickier component.

· It looks like the RBI rate cuts are ruled out for now, with inflation persistently high. In fact, the RBI may have to soon consider rate hikes and other tightening measures.

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