Feb retail inflation eases to 4-month low of 4.44%, IIP grows 7.5% in Jan

December IIP was 7.1% and Jan CPI was 5.07%

Industrial production grow at a high rate of 7.5% in January 2018 against 3.5% in the year-ago month on the back of good show by manufacturing coupled with higher offtake of consumer and capital goods.

The Index of Industrial Production (IIP) had grown at 7.1% in December 2017, according to the data released by the Central Statistics Office (CSO) today.

The IIP growth in January this year was mainly on account of uptick in manufacturing sector which constitutes 77.63% of the index. It grew by 8.7% during the month as compared to 2.5% in January 2017, showing signs of recovery in the economy.

Retail inflation fell to a 4-month low of 4.44% in February on cheaper food articles and lower cost for fuel.

Retail inflation, based on Consumer price index (CPI), was at 5.07% in January. In February 2017, however, it was 3.65%.

It was 4.88% in November last year.

Data released by the Central Statistics Office (CSO) showed that the rate of price rise in the consumer food segment was lower at 3.26% in February, as against 4.7% in the previous month.

Capital goods, a barometer of investments, showed a sharp increase in output by 14.6% in January, 2018 as against a decline of 0.6% year ago.

Consumer non-durable goods, which are mainly fast moving consumer goods, too showed an increase of 10.5% as against a growth of 9.6%. Consumer durable goods recorded a growth rate of 8% in January 2018 against a contraction of 2% a year ago.

However, the mining sector saw a flat growth of 0.1% compared to 8.6% a year ago.

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

In terms of industries, 16 out of 23 industry groups in the manufacturing sector showed positive growth during January, 2018.

IIP grew at 4.1% in April-January this fiscal as compared to 5% in same period in previous financial year.

Inflation in vegetables was 17.57% last month, down from 26.97% in January), and for fruits it was 4.80% (as against 6.24%).

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

Inflation for the fuel and light category was at 6.80% in February (against 7.73% in January). However, the rate of price increase was higher for transport and communication services at 2.39% (1.97% January).
 

"My CPI projection again spot on at 4.4 percent led by a sharp fall in food inflation exactly predicted by me at 3.38 percent. This is led by a sharp correction in vegetable prices and continued disinflation in pulses. What is noteworthy is that this low reading is despite an unfavourable statistical base. This clearly shows that inflation is not a serious risk for India. IIP growth is still very skewed and facilitated by favourable statistical base," said Rupa Rege Nitsure, group chief economist, L&T Finance Holdings.