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Inflation UPSC NOTE

 Challenges of slowing growth and persistent inflation

  • Latest data, point to a palpable softening in economic momentum. 

  • The official Index of Eight Core Industries and S&P Global’s Purchasing Managers’ Index (PMI) for the manufacturing sector for October, Lights the data.

  • Output across the key infrastructure industries, from cement, coal, steel and electricity, show the average growth in production eased appreciably to a four-month low of 8.1% in September, from the 12.5% pace posted in August. 

  • Only fertilizers registering a quickening in growth from the preceding month as farmers stocked up on the key agricultural input ahead of the rabi season. 

  • This year southwest monsoon season resulted in 13% surplus precipitation for September, also likely contributed to dampening demand and output for cement, electricity and steel. 

  • All the eight sectors, with the overall index declining 4.8% from August’s level. 

  • Coal offered the silver lining the year-on-year growth in output of the fuel eased only slightly to a still robust 16.1% pace, from August’s 17.9%, and posted just a 1.5% sequential contraction.

  • PMI data for October buttresses concerns that broader economic momentum may yet again be sliding for want of traction

  • PMI signalled sectoral growth slid to an eight-month low last month, amid a weakening in demand, particularly for consumer goods.

  • More worrying is the fact that less than 4% of the about 400 companies surveyed said they were adding staff, thus depressing job creation in manufacturing to the slowest level since April.

  • Input cost inflation also accelerated. 

  • Producers were forced to temper the pass-through of higher costs. 

  • Panellists cited rising inflation expectations as the key factor expected to dent demand and production growth over the next 12 months

  • The advance estimates for lower kharif output, disconcertingly flag the fact that the farm sector may be able to offer little succour as rural incomes get hit. 

  • Policymakers have their task cut out to surmount the twin challenges of slowing growth and persistent inflation.



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Learnerz IAS | Concept oriented UPSC Classes in Malayalam: Inflation UPSC NOTE
Inflation UPSC NOTE
Learnerz IAS | Concept oriented UPSC Classes in Malayalam
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