India’s Consumer Price Index (CPI) for August 2024 stands at 3.65%, the second lowest in the last five years. CPI, one of the most widely used and tracked indicators of inflation, measures the percentage change in the price of a basket of goods and services consumed by households. A low CPI indicates low inflation which means that there is a slow-to-gradual increase in the prices of goods and services consumed by households. 

The Reserve Bank of India (RBI) has been mandated by the Government of India, under the Flexible Inflation Targeting Framework (FITF) to keep inflation levels under 4 per cent (+/- 2 per cent). The RBI, through its monetary policy, has been attempting to keep inflation rates closer to 4 per cent and seems to be successful in doing so. While annual inflation in 2023-24 was 5.4%, the RBI is optimistic of it easing further to 4.5% in 2024-25 and further to 4.1% in 2025-26.

At the same time, quick estimates of the Index of Industrial Production (IIP) for July 2024 stand at 4.8%, a marginal rise over June 2024’s 4.7%. However, given previous lows, this slow but steady increase is a step in the right direction. IIP is representative of the performance of various industrial sectors of the economy. A high IIP indicates robust activity across industries that will eventually contribute to positively impacting the nation’s Gross Domestic Product (GDP).

In a recent speech, RBI Governor Shaktikanta Das, has expressed confidence about India’s GDP going above 7% in 2024-25. If CPI and IIP numbers sustain their respective momentums over the next few months, India could comfortably achieve that target. 

CPI numbers are released by the Ministry of Statistic and Programme Implementation (MoSPI) on a monthly basis with a month’s lag, which means that the current percentage is based on an analysis of percentage change in prices of goods and services in August. IIP numbers are released by MoSPI on a monthly basis with a six-week lag.