Annual consumer price index (CPI) inflation fell to 5.88 percent in November, from the previous month's 6.77 percent, and below the RBI's 6 percent upper tolerance limit for the first time since December 2021. The index of industrial production (IIP) contracted 4 percent year-on-year in October, led by manufacturing at minus 5.6 percent and by sub-sectors that are proxies for consumption and investment: consumer durables at minus 15.3 percent, non-durables at minus 13.4 percent and capital goods at minus 2.3 percent.

Clearly the pent-up demand that fuelled consumption spending after the lifting of Covid-19 restrictions has ebbed. Nor are there signs of a fresh investment cycle, even as exports, which were doing well till September, have entered negative territory on the back of a global slowdown. That said, the evidence on growth slowing is more compelling than on inflation moderating.

The latter's decline in November had mainly to do with food, which registered a steep dip to 4.67 percent from 7.01 percent in October. That in turn was courtesy of vegetables and fruits, which recorded inflation of minus 8.08 percent and 2.62 percent, basically reflecting a seasonal trend, since winter is when the supply of fresh produce turns plentiful and affordable.