Retail inflation at two-year low

Inflation on traditional Chinese medicine reached 5.3% in December

Meanwhile, retail inflation hit a two-year low at 3.41% in December, compared with 3.63% in November as vegetable prices continued to contract.

Consumer Food Price Index (CFPI) for the month of December stood at 1.37%.

Meanwhile, the industrial production grew by 5.7 per cent in November against contraction of 3.4 per cent same month past year.

The Indices of Industrial Production for the Mining, Manufacturing and Electricity sectors for the month of November 2016 stand at 135.9, 181.2 and 191.2 respectively, with the corresponding growth rates of 3.9%, 5.5% and 8.9% as compared to November 2015. The growth in manufacturing sector at 5.5 per cent is an indicative of steady industrial activity and reflecting the visible effect of various reform measures undertaken by the Government, said Gopal Jiwarajka, President, PHD Chamber of Commerce and Industry.

The Consumer Price Index (CPI)-based inflation stood at 3.63 per cent in November 2016, as per the data released by the Ministry of Statistics and Programme Implementation.

Consumer spending as measured by PFCE will likely grow 6.54 percent in 2016-17 over a year ago, compared to 7.4 percent growth in 2015-16, signs that households have deferred spending to deal with the currency culling exercise. According to some economists, the non-food price indices for clothing, housing, and miscellaneous items that have witnessed inflation in the region of 4-5% are a cause for concern. The cumulative growth for April-November 2016 over the corresponding period of 2015 stands at 0.4%.

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"Given the reduction in lending rates announced by several banks, we hope to see an increase in both consumption and investment which will hopefully have a positive impact on manufacturing growth in coming months".

However, considering the production trends in sectors like auto, the effects of demonetisation may become more apparent in December, says a Crisil report, adding that IIP data is false positive.

The consumer non-durables segment's output inched up by 2.9 per cent, whereas the consumer durables segment increased by 9.8 per cent.

Economists surveyed by Reuters had forecast a 1.3 percent growth in output compared with a revised 1.8 percent year-on-year fall in October.

Likewise, prices of pulses and products also slipped further in negative territory at (-) 1.57 in December.

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