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Temporary respite: On latest retail inflation and industrial output data

Price stability must be maintained even as steps to boost demand are taken
The latest retail inflation and industrial output data from the National Statistical Office (NSO) offer some relief from the pall of gloom cast by the relentless second wave of the COVID-19 pandemic. Provisional headline inflation slowed to a three-month low of 4.29% in April, helped by softer food prices and a statistical base effect. The rate using an imputed index for the year-earlier period was 7.22%. A separate NSO release showed March industrial output jumped by 22.4%, benefiting again from the fact that the Index of Industrial Production (IIP) had posted an 18.7% contraction in March 2020, when the economy was halted by the start of a nationwide lockdown. A closer look at the inflation data reveals a substantial cooling in the prices of cereals, milk and milk products, vegetables, and pulses and products. While both cereals and vegetables saw a deflationary trend widen to -2.96% and -14.2%, resp ....

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