Industrial Production (Apr.)

There is unlikely to be a clearer illustration of the distorting impact of base effects than the 134% y/y rise reported in Indian industrial production in April. Industrial output actually dropped in April as a second wave of infections hit activity. But the lockdown last year was far more severe than this year’s. Looking ahead, the economic recovery is also likely to be more gradual than that seen a year ago.
Shilan Shah Senior India Economist
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India Data Response

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Rebound underway, but relapse risks grow

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The recent jump in India’s consumer price inflation has taken us (and most others) by surprise and we have revised up our near-term forecasts. However, a big chunk of the surge – even in the most closely-watched core measure – can be explained by rising global commodity prices, which we think has largely run its course. Further ahead, a (likely) strong monsoon harvest and a still-large output gap should help to anchor headline inflation and relieve pressure on the RBI to tighten policy any time soon.

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