India CPI Inflation, IIP Growth Rate, measured by the Consumer Price Index (CPI), relieved slightly to 6.26 per cent in the month of June.

India’s factory output, measured in terms of the Index of Industrial Production (IIP), witnessed a year-on-year growth of 29.3 per cent in May, two separate data released by the Ministry of Statistics & Programme Implementation (MoSPI) showed on Monday. The retail inflation during the month of May was at 6.30 per cent.

This is the second successive time that the CPI data has come over the Reserve Bank of India’s (RBI) upper margin of 6 per cent. Prior to this, the CPI came below the 6 per cent mark for five consecutive months. The government has asked the central bank to maintain retail inflation at 4 per cent with a margin of 2 per cent on either side for a five-year period ending March 2026.

CPI data is primarily factored in by the RBI while making its bi-monthly monetary policy. Last month, the central bank’s Monetary Policy Committee (MPC) had kept the repo rate unchanged for the sixth time in a row at 4 per cent while maintaining an ‘accommodative stance’ as long as necessary to mitigate the impact of the second wave of the Covid-19 pandemic. 

The RBI, in its last MPC meeting, had projected the CPI inflation at 5.1 per cent during the ongoing financial year 2021-22. It sees CPI inflation at 5.2 per cent in Q1, 5.4 per cent in Q2, 4.7 per cent in Q3, 5.3 per cent in Q4 with risks broadly balanced. 

The Consumer Food Price Index (CFPI) or the inflation in the food basket, however, inched slightly higher on-month during June to 5.15 per cent, from 5.01 per cent in May, the data revealed. 

The hike in the food basket was mainly due to a sharp rise in prices of oils and fats which surged 34.78 per cent on year in June. Apart from this, the egg prices segment saw a rise of 19.35 per cent while that of fruits gained 11.82 per cent and pulses and products rose 10.01 per cent. Non-alcoholic beverages climbed 14.71 per cent. On the other hand, the vegetables segment slipped -0.70 per cent and cereals and products declined -1.94 per cent. 

Apart from food and beverages, the fuel and light segment rose 12.68 per cent in June, while clothing and footwear gained 6.21 per cent and the housing segment inched up 3.75 per cent. In a separate data released by MoSPI, the country’s factory output witnessed a growth of 29.3 per cent on-year to 116.6 during the month of May. 

The IIP had crashed -33.4 per cent on-year to 90.2 in May 2020, the data showed. This was mainly due to the nationwide lockdown which was imposed last year to curb the first wave of coronavirus (Covid-19) pandemic. 

Until now in the fiscal year 2021-22 (April-May), the industrial sector has seen a rise of 68.8 per cent, compared to a -45.0 per cent contraction in the corresponding period a year ago, the data showed. The growth in IIP during May is on account of the manufacturing, electricity and mining sectors. The manufacturing sector saw a growth of 34.5 per cent on-year to 113.5 in May, while the mining sector saw a rise of 23.3 per cent to 108.0. The electricity sector too rose 7.5 per cent to 161.9, the MoSPI data showed. 

“The growth rates over corresponding period of previous year are to be interpreted considering the unusual circumstances on account of Covid-19 pandemic since March 2020,” mentioned the press release statement. In the corresponding month year ago, the manufacturing sector had contracted -37.8 per cent, the mining sector had witnessed a fall of -20.4 per cent and the electricity sector had declined -14.9 per cent.