IIP, CPI data ahead of 2018 Budget today, inflation may cross 5% mark
Experts say IIP will accelerate to 4% in November from 2.2% a month ago, while CPI will cross the 5% mark at 5.04% in December from 4.88% a month ago
New Delhi: The Central Statistics Office will release the index of industrial production (IIP) data for November and Consumer Price Inflation (CPI) data for December on Friday that could confirm the prospects of sustained economic recovery and rising risks of inflation.
These will also be the final set of data that finance minister Arun Jaitley will have as he sits down to finalize his Budget for 2018-19 to be presented on 1 February.
According to Bloomberg analysts’ estimate, IIP will accelerate to 4% in November from 2.2% a month ago, while CPI will cross the 5% mark at 5.04% in December from 4.88% a month ago.
However, rising retail inflation, mostly due to hardening fuel and vegetable prices, could complicate matters for the economy as it may reduce profit margins for companies may raise input costs and reduce any last chances of an interest rate cut by the Reserve Bank of India (RBI) to revive economic growth.
The statistics office last Friday projected the economy to slow to 6.5% in 2017-18 from 7.1% a year ago while maintaining that growth will accelerate to 7% in the second half of the year (October-March) from 6% in the first half (April-September). The economy has been hurt by the lingering impact of demonetization and disruptions caused by GST.
Merchandise exports grew at a six-year high of 30.5% in November while the index for eight core sectors constituting 41% of IIP expanded at its fastest pace in 13 months at 6.8% during the same month.
In November, passenger vehicle sales grew at 14.3%, the fastest pace since July, on the back of a low base effect due to the demonetization of high-value banknotes in November 2016.
The Nikkei India manufacturing Purchasing Managers’ Index (PMI) rose at the fastest rate in five years in December to 54.7 from 52.6 in the previous month. A reading above 50 denotes expansion and one below it signals contraction.
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