Healthy takeaway from IIP

The consumption story, and revival in NBFC lending may improve prospects

The rate of change of retail inflation fell to 3.31 per cent, year-on-year (YoY) in October, down from 3.77 per cent in September 2018. Meanwhile, the Index of Industrial Production (IIP) rose to 4.5 per cent YoY for September 2018.

These are good numbers but there are base effects. The key variable for retail inflation is the food basket, with 46 per cent weight in the Consumer Price Index (CPI). Food inflation was negative in October 2018 at minus 0.9 per cent YoY. That was enough to explain the CPI trends. However, core CPI inflation (CPI inflation minus food and fuel)