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Twin worry for govt as retail inflation surges, IIP falls

Friday,   12-Oct-2018   05:39 PM (IST)

India’s retail inflation accelerated in September, though it remained within the central bank’s permissible limit, and factory output fell to a three-month low in August because of a higher base effect—a double whammy for the economy.Consumer price index (CPI)-based inflation rose from 3.69% in August to 3.77% in September while the index of industrial production (IIP) fell from 6.5% in July to 4.3% in August, data released by the Central Statistics Office on Friday showed.The volatility in the IIP growth rate indicates that industrial recovery remains uneven and fragile ahead of the festive season. The Reserve Bank of India’s (RBI’s) latest business expectations index, however, shows industrial activity improved in the July quarter.The depreciating rupee and rising crude oil prices and revision in minimum support prices for farm produce are expected to put upward pressure on retail inflation. The uneven distribution of monsoon rainfall may limit the growth in kharif output and rural incomes in the coming months.