India's inflation darts up, industrial activity moderates: CRISIL

The acceleration in inflation was driven largely by a rise in food and core inflation. Fuel inflation moderated slightly to 10.8 per cent from a downwardly revised 10.9 per cent of December.

Core CPI inflation remained sticky at 6.2 per cent in January, slightly higher than the 6.1 per cent of December. Sticky core inflation continues to pose challenges from the demand side. Rating agency CRISIL maintains its CPI inflation forecast for fiscal 2022-23 at 6.8 per cent, given the underlying pressures from food and core.

Stickiness of core inflation was seen from demand in both goods and services: particularly in sequential momentum in price rise of clothing and footwear, household goods and services and health and recreation services, CRISIL said in a release.

Industrial growth is expected to come under pressure in the next fiscal as global demand slows, CRISIL noted. Domestic demand could lose momentum as well as the transmission of Reserve bank of India’s rate hikes progresses. CRISIL expects these factors to slow gross domestic product growth to 6 per cent in the next fiscal from 7.03 per cent in the current.

Within manufacturing, consumer durables saw the sharpest decline, followed by intermediate goods, capital goods, infrastructure and construction goods, and consumer non-durables.

ALCHEMPro News Desk (DS)