IIP growth for October came in at a high of 11.7% which was higher than our forecast of 8.5%.
1. There was all round performance with mining, manufacturing and electricity registering double digit growth. This reflects higher business activity.
2. Within manufacturing 14 of the 22 sectors registered positive growth
a. The exceptions were textiles which were affected by exports declining and electronic goods which continues to surprise.
3. In terms of use based classification there was again an all-round performance.
a. Both consumer durable and non-durable goods performed well which is a relief as they have been trailing for long.
i. The onset of the late festival seasons has contributed to this increase, which if sustained can take overall growth to a higher trajectory.
b. Capital goods and infra goods have done well in accordance with the trends seen in core sector performance.
CPI inflation for November came in at 5.6% which is almost the same as our forecast of 5.7%
1. Food inflation continues to be a challenge with the basket of high inflation products widening: fruits, vegetables, cereals, pulses, and spices. There are clearly supply issues here and given lower level of kharif output will exert pressure on inflation.
2. Core inflation part has softened at 4.1% for the last few months. The only segments which have higher inflation are personal goods and services and health and education which are in the services domain.
3. With inflation being high this month and likely to remain so in December, it will be a concern.
4. The possibility of a rate cut still remains only in Q2 of next year when inflation comes down to 4%. RBI projections till Q1-Fy25 is above 5%.
5. 7 of the 25 states had inflation above 6% with the highest being Odisha followed by Rajasthan. Clearly where food products have higher weight in the index have registered higher top line inflation.
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