Industrial output contracts 8% in Aug.

Retail inflation rose to an eight-month high of 7.34 per cent in September on the back of pricier food items, including vegetables.

“Barring March, retail inflation has exceeded 6 per cent in 10 months. Food inflation spiked to double digit (10.68 per cent) after April. Food inflation was led by meat and fish, egg, oil and fats, pulses, vegetables and spices. It appears that the supply disruption led inflation is slowly coming under control, as core inflation (5.67 per cent) moderated 10 basis points in September as against August. However, it is the fifth consecutive month when core inflation has been above 5 per cent.”

With this, the possibility of a rate reduction in the near term has become remote as the current rate of retail inflation has gone much beyond the RBI’s comfort level of 4 per cent (with a 2 percentage point swing in either direction).

The bad news continued with the industrial output contracting 8 per cent in August compared to the same month last year, showing that the after-effects of the Covid-19 lockdown have not worn off. But the gap between this year and the last narrowed from a steep 57.31-per cent decline reported in April compared to April 2019, according to data released by the Ministry of Statistics and Program Implementation (MOSPI).

There was a steep 8.6 per cent decline in manufacturing and a 9.8 per cent drop in mining in August. Electricity generation improved with the fall limited to 1.8 per cent in August.