(LiveMint)
India’s retail inflation dropped to a 17-month low in November, while factory output grew to an 11-month high on the back of a lower base, conditions that allow for a potential rate cut in the first policy meeting under the new Reserve Bank of India (RBI) governor, Shaktikanta Das.
Retail inflation slowed down to 2.33% in November, below the central bank’s projection, from 3.38% a month ago, according to data released by the Central Statistics Office. Factory output measured by the index of industrial production (IIP) grew at a faster clip at 8.1% in October, compared with 4.5% in the previous month. Urjit Patel in his last monetary policy committee meeting on 5 December, before resigning on Monday as RBI governor, kept policy rates unchanged and cut the inflation forecast for the rest of the fiscal, citing a sharp fall in crude oil prices and food “deflation”.
With crude oil prices falling more than 30% from recent highs and an impending global slowdown and higher oil production in the US, analysts expect the upside to oil price rises to have been capped. Overproduction in farm output has led to a glut and farmers’ distress, with vegetable deflation hitting 15.6% in November and two consecutive months of overall food deflation.
