Statsguru: CPI falls to 17-month low, industrial activity at 11-month high

Food index contracts for second straight month, core inflation also moderates

Leading economic indicators show improved performance over the past few months. Retail inflation rate fell to a 17-month low in November while industrial activity grew at an 11-month high in Octobr, according to the latest data released by the Central Statistics Office (CSO). 

On the inflation front, the consumer price index (CPI) fell to 2.33 per cent in November, from 3.38 per cent in October (Chart 1), well below the Monetary Policy committee’s target. In large part, the decline in headline inflation rate was driven by the contraction in the food price index, though even core inflation, which has remained sticky so far, moderated in November (Chart 2).

Much of the decline in the food price index is driven by the contraction in the CPI (vegetables and pulses) as seen in Chart 3. Further, the correction in retail fuel prices (Chart 4) and the waning impact of the revision in house rent allowance (HRA) also weighed down the index. On the growth front, industrial output rose by a healthy 8.1 per cent in October, up from 4.5 per cent in the previous month (Chart 5), driven by stronger manufacturing growth at 7.9 per cent in October, from 4.6 per cent in the previous month (Chart 6). Part of the surge is due to inventory adjusted as the festival season started late this time and a favourable base effect, say economists.

Consumer durables also registered a strong performance, growing at 17.6 per cent in October, from 5.2 per cent the 

previous month (Chart 7), while capital goods, which connote investment in the economy, grew at a robust 16.8 per cent, up 6.5 per cent the month before (Chart 8). 
 

StatsGuru is a weekly feature. Every Monday, Business Standard guides you through the numbers you need to know to make sense of the headlines; compiled by BS Research Bureau