Retail inflation drops to 4.59 per cent in December

India's retail inflation fell to 4.59 per cent in December after it remained elevated for many months in 2020, According to official data which was released on Tuesday. It is a sharp decline from 6.93 per cent recorded in November 2020. The drop in retail inflation, measured by the Consumer Price Index (CPI), last month was due to declining food prices. Food inflation declined to 3.41 per cent in December 2020, compared to 9.5 per cent in the previous month, as per data released by the Ministry of Statistics and Programme Implementation.

However, according to the IIP data, manufacturing sector output shrank by 1.7 per cent in November 2020. The mining output also declined 7.3 pr cent, while power generation grew 3.5 per cent. While the falling inflation is a positive development for India’s economic recovery, government data showed that the country’s industrial production declined in November. India’s Index of Industrial Production (IIP) showed that there has been a 1.9 per cent contraction in industrial activity in November. This is worrisome as the growth of industrial activity is important for economic revival.