What Experts Make Of The Inflation And IIP Data

Consumer price inflation for the month of April grew to 4.3 per cent, while IIP was up 22.4%. Experts feel that the CPI inflation was slightly better than expectations.

"Headline CPI grew 4.3% YoY in Apr'21, lower than our forecast of 4.6% and market consensus of 4.1%. The deceleration was broad-based. Food inflation eased to 2% YoY last month (vs. our exp of 2.8%), while the core inflation eased to 10-month low of 5.2% YoY (vs. exp of 5.4%).

Going forward, headline inflation could rise towards 5% by Jun'21 before easing to 3.5% by Nov'21. Overall, it could average 4.5% in FY22, following 6.2% in FY21.

IIP grew 22.4% YoY in Mar'21, same as our expectations and higher than the consensus of 20%. It implies that *industrial activity grew 5.3% YoY in 4QFY21, the highest growth in 12 quarters. This was on the base of a fall of 4.3% YoY in 4QFY20," says Nikhil Gupta, Chief Economist at Motilal Oswal Financial Services Ltd.

"After hitting a 4-month high in March, the CPI inflation for the month of April eased to 4.29%, near the central point of the RBI target. The inflation figure is a result of the low base recorded last year, coupled with softening of food prices and stable fuel prices. The softening of inflation is a positive development for RBI, though the risk of inflation spike remains on the back of rising global commodity prices. The IIP figure is purely a work on negative base recorded last year," says Nish Bhatt, Founder & CEO, Millwood Kane International - an Investment consulting firm.

World over investors are eagerly waiting for inflation numbers, to see whether easy money policies would continue for long. In the US, The US Labor Department reported that Consumer prices jumped 4.2% in the 12 months through to April, up from 2.6% in March and marking the biggest increase since September 2008. this has raised concerns that interest rates in the US may be trending higher, much earlier than anticipated.