Industrial output down, inflation at 5.05 percent

It is expected that the RBI would cut rates in the coming monetary policy review

GN Bureau | September 14, 2016


#monetary policy review   #rate cut   #RBI   #inflation   #Industrial output  


 India’s industrial output declined by 2.4 percent in the month of July after it had climbed 1.95 percent the month before. However, the government data also showed a slower inflation at 5.05 percent in August; the RBI has set a target of 5 percent retail inflation by March 2017. 

The dip in inflation is mainly because of a steep fall in food inflation –  from 8.35 percent in July to 5.91 in percent August. 
 
The reason behind fall in industrial output was primarily due to dip in production in the manufacturing sector, which forms a major portion of the IIP (index of industrial production) – it declined by 3.4 percent in July. 
 
Both these events are expected to push the apex bank to cut rates at the next monetary policy review scheduled on October 4.
 

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