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IIP Soars 11.7% in October; Retail Inflation Climbs to 5.55% in November

India witnessed contrasting trends in its economic indicators in October and November, with the Index of Industrial Production (IIP) surging to a 16-month high while retail inflation experienced an uptick, reaching a three-month high. These developments have significant implications for GDP projections and monetary policy.

1. IIP Hits 16-Month High in October

  • The IIP recorded an impressive 11.7% year-on-year growth in October, marking a substantial increase from the 6.8% reported in September.
  • Key contributors to this growth were the electricity (20.4%), mining (13.1%), and manufacturing (10.4%) sectors, surpassing Bloomberg’s forecast of 10.5%.

2. Impact on GDP Estimates

  • The robust performance of the IIP is expected to influence the first advance estimates of the gross domestic product (GDP) data for 2023-24, scheduled for release on January 5. This data will precede the Interim Budget for FY25, set to be presented on February 1.

3. Retail Inflation Rises in November

  • Retail inflation, measured by the Consumer Price Index (CPI), increased to 5.55% year-on-year in November, up from 4.87% in October.
  • The upward trajectory was attributed partly to a seasonal spike in vegetable prices, contributing to a three-month high in overall inflation.

4. Inflation Drivers

  • Food inflation saw a notable rise, reaching 8.7% in November, with vegetable prices accelerating sharply by 17.7%.
  • Other contributors to increased inflation included fruits (10.95%), pulses (20.23%), and sugar (6.55%).

5. Sector-wise Performance in IIP

  • Among the 23 manufacturing industries, only four, including apparel, wood, computers, and furniture, witnessed contraction in October.
  • Strong double-digit growth was observed in primary goods (11.4%), capital goods (22.6%), infrastructure goods (11.3%), and consumer durables (15.9%), indicating a revival in both urban and rural demand.

6. Core Inflation and Monetary Policy

  • Core inflation, excluding volatile food and fuel components, stood close to 4% in November.
  • The Monetary Policy Committee (MPC) of the Reserve Bank of India (RBI) unanimously kept the repo rate unchanged at 6.5% for the fifth consecutive policy review, with the central bank retaining its forecast for retail inflation at 5.4% for FY24.

Important Questions Related to Exams

Q: What was the growth rate of India’s Index of Industrial Production (IIP) in October?

A: The IIP surged to an 11.7% year-on-year growth in October.

Q: What sectors contributed significantly to the IIP growth?

A: Electricity (20.4%), mining (13.1%), and manufacturing (10.4%) sectors were key contributors.

Q: How did retail inflation perform in November?

A: Retail inflation rose to 5.55% in November, marking a three-month high.

Q: What were the drivers of the increased retail inflation?

A: Seasonal spikes in vegetable prices and upticks in fruits, pulses, and sugar contributed to the inflation rise.

Q: What impact did these economic indicators have on GDP estimates?

A: The robust IIP performance is expected to influence the first advance GDP estimates for 2023-24.

Q: What is the RBI’s stance on monetary policy and inflation forecasts?

A: The RBI maintained a 6.5% repo rate and retained a 5.4% retail inflation forecast for FY24.


IIP Soars 11.7% in October; Retail Inflation Climbs to 5.55% in November_4.1


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