Perspective on IIP & CPI Numbers
<b>Vivek Rathi, Director - Research, Knight Frank India.</b> <b>What are your views on the IIP level in January 2021?</b> <span style="font-weight: 400;">Encouragingly, IIP numbers for past periods of October 2020 and December 2020, which were due for revision, have been revised upwards with a
Published -
Mar 15, 2021 4:25 AM
Vivek Rathi, Director - Research, Knight Frank India. What are your views on the IIP level in January 2021? Encouragingly, IIP numbers for past periods of October 2020 and December 2020, which were due for revision, have been revised upwards with additional data. However, the IIP level in January 2021 has declined by 1.6%, which is mainly on account of a sharp dip in capital goods and consumer non-durable segment. As economic activity makes a comeback to complete normalcy, aided with the recent government initiatives on production linked subsidies and capex focus, we believe that this category will improve in near future. However, the sharp decline in consumer non-durable segment points towards a need for intermediate policy support for job creation and consumption. What has been the pattern of consumer inflation? After successive declines for three consecutive months, consumer inflation level has increased to 5.03% YoY in February 2021 primarily on account of increased price level in food items and transport categories. Higher petroleum prices will play a role in both direct categories like transport as well as indirect categories like food items. Even while the CPI level remains within the comfort level of the central bank, increased government borrowing and higher inflation level will influence the interest rate in the economy, where benign interest rates for a sufficiently long period are much needed to support consumption and investment momentum.
Tags : Interviews Knight Frank India economy interest rate Vivek Rathi IIP & CPI Numbers consumer inflation