Published: Mon, March 12, 2018
Business | By Max Garcia

Retail inflation eases to 4.4% in February; IIP grows 7.5% in January

Retail inflation eases to 4.4% in February; IIP grows 7.5% in January

Growth in the Index of Industrial Production quickened to 7.5% in January from 7.07% in December.

Moreover, this was the biggest growth since February 2011.

The manufacturing sector grew 8.7 per cent in January, and 10.7 per cent and 8.4 per cent in November and December, respectively. While the manufacturing sector grew 8.7% in January, compared with 2.5% in the same month a year ago, capital goods grew 14.6% and consumer non-durables 10.5% in the month under review. The consumer durables sector saw growth accelerating sharply to 8% from 0.86% over the same period.

Retail inflation for February eased down to 4.4 per cent, compared to 5.07 per cent in the previous month. In February 2017, however, it was 3.65 per cent. Inflation in vegetables was 17.57 per cent in February against 26.97 per cent in January.

Inflation in pulses and spices witnessed fall in price rise.

The Reserve Bank of India (RBI), which takes into consideration the inflation indicator for deriving it's position on India's monetary policy stance, had increased the CPI target for Q4FY18.

During January, 16 out of 23 industry groups in the manufacturing sector showed positive growth.

The IIP growth in January this year was mainly on account of up-tick in manufacturing sector which constitutes 77.63 percent of the index.

Milk and its products too were less expensive with inflation print of 4.21 per cent, cereals and products at 2.10 per cent, meat & fish at 3.31 per cent while for eggs the prices grew at a slower pace of 8.51 per cent.

As per the use-based classification, the growth rates in January 2018 over January 2017 are 5.8 per cent in primary goods, 4.9 per cent in intermediate goods, and 6.8 per cent in Infrastructure/ Construction Goods.

"The sharp dip in retail inflation in February has reinforced our expectation that the MPC would keep the repo rate unchanged in the upcoming policy review in April, which may prompt a further easing of bond yields in the immediate term", said Aditi Nayar, Principal Economist, ICRA, warning that inflation may see a spurt in the coming months.

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