Double whammy of rising inflation and falling IIP
The graph of industrial growth numbers suggests that the recovery has been weak and is facing strong headwinds.
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For representational purpose. (Photo | Reuters)
Two sets of recently released numbers suggest the applause for an economic turnaround may have been a wee bit too early. The National Statistical Office (NSO) said last week that India’s retail inflation rose to 5.03% in February, mainly driven by higher food and fuel prices. Food inflation alone went up steeply to 3.87% in February, doubling the 1.89% inflation rate for the previous month. The Consumer Price Index (CPI)-based inflation was 4.06% in January 2021 and 6.58% in February 2020. Simultaneously, the Index of Industrial Production (IIP) contracted by 1.6% in January on the back of a poor performance by the mining and manufacturing sectors, surprising analysts. Bloomberg for instance had estimated a 1% growth.