The growth rate of India’s retail inflation, which is measured by the Consumer Price Index (CPI), slowed to 6.58 per cent in the month of February. Separately, the country’s factory output, which is measured in terms of Index of Industrial Production (IIP), witnessed a growth of 2.0 per cent on-year to 137.1 during the month of January, according to two separate data released by the Ministry of Statistics & Programme Implementation (MoSPI) on Thursday.
The CPI had grown 7.59 per cent in the month of January and 2.57 per cent in February last year, the data showed.
This is the third month in a row when the retail inflation has exceeded the Reserve Bank of India’s (RBI) upper margin of 6 per cent. The government has mandated the central bank to keep inflation within the range of 4 per cent with a margin of 2 per cent on either side.
The central bank mainly factors in retail inflation while deciding its bi-monthly monetary policy.
The Consumer Food Price Index (CFPI) or the inflation in the food basket rose to 10.81 per cent in February against 13.63 per cent in the preceding month. In February 2019, the CFPI saw a negative growth of (-)0.73 per cent, the MoSPI data showed.
The retail inflation has risen primarily due to a spike in vegetable prices that saw a 31.61 per cent year-on-year rise in February. This apart, the pulses and products segment saw a rise of 16.61 per cent, while that of meat and fish rose 10.20 per cent and spices prices gained 8.80 per cent.
Reflecting on the development, Rahul Bajoria, the chief India economist at Barclays, said, “CPI inflation came in weaker than expected, largely given lower food prices. CPI inflation is set to re-enter RBI’s target band in March, as lower energy prices, pull back in demand and global headwinds are mounting. RBI is likely to throw caution in the wind and could even move inter-meeting as uncertainty is rising.”
Index of Industrial Production (IIP)
Separately, the country’s factory output, which is measured in terms of Index of Industrial Production (IIP) witnessed a growth of 2.0 per cent on-year to 137.1 during the month of January, a separate data released by the MoSPI showed.
The IIP had grown by 1.6 per cent in January 2019.
The industrial growth during the period of April 2019-January 2020 rose 0.5 per cent from the corresponding period year ago. The IIP growth was 4.4 per cent during the same period last year, the data showed.
As per the data, the manufacturing sector output grew by 1.5 per cent on-year to 137.6, and the electricity generation rose by 3.1 per cent to 155.6. Mining sector output, grew by 4.4 per cent on-year to 124.3.
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