IIP, CPI Review - Growth Slows, Inflation Spikes; RBI To Stay Accommodative: Systematix
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Systematix Research Report
The spike in Consumer price index inflation to 5.5% in March 2021 along with high core inflation and deepening contraction in industrial production (down 3.6% in February 2021) adds to economic growth uncertainty.
The decline in industrial growth contrasts the still robust manufacturing purchasing managers' index of 55.4 in March 2021, which though lower than 57.2 in Feb-21 is indicating an expansion.
A favourable base effect is likely to induce a significant spike in Index of Industrial Production growth in the next four months, starting with up 14% in March-21.
The inflation outlook remains comfortable around 5%.
However, downside risks to growth arising from local lockdowns will prompt Reserve Bank of India to remain accommodative for the entire FY22.
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