July 2021 Consumer Inflation Level Of 5.59% Lends Comfort

Vivek Rathi, Director ? Research, Knight Frank India shares his perspective on IIP and CPI numbers. Coming out of the COVID second wave, as the country gradually opens its economic activities and eases mobility curbs, we will see a reflection

BY Realty Plus
Published - Friday, 13 Aug, 2021

July 2021 Consumer Inflation Level Of 5.59% Lends Comfort

Vivek Rathi, Director ? Research, Knight Frank India shares his perspective on IIP and CPI numbers. Coming out of the COVID second wave, as the country gradually opens its economic activities and eases mobility curbs, we will see a reflection of both pent up activity and pandemic influenced tailwinds in some sectors. Albeit concerns of the impending third wave and delta variant virus will keep the market participants on a watchful mode, vaccination progress and developing herd immunity will be a comforting factor on the pandemic situation. In case of IIP index, besides the base period impact, growth of 13.6% in June 2021 is chiefly influenced by the consumer durables and capital goods segments. With adequate system wide liquidity and low interest costs, sustainable pick-up in consumer demand will be awaited as a key catalyst for broad based economic recovery. In context to consumer inflation, which has remained at elevated levels for some time now, the July 2021 level of 5.59% lends comfort. With this moderation in inflation, it is within the central bank’s comfort zone of 2-6%. With this monetary policy guidance metric in check, households and corporate borrowers alike will continue to benefit from the low interest rate and accommodative monetary policy stance for a sufficiently long period of time.”