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

CPI inflation eases to 4.44% in February 2018 food inflation at 3.26

Consumer price inflation (CPI) was at 5.07% in January. It was 4.88 percent in November previous year.

India's measure of consumer price inflation on an annual basis, the consumer price index (CPI), eased to 4.44% in February, data released by the ministry of statistics showed on Monday.

The inflation rate is in below expectations as a Reuters survey of 30 economists had predicted it to come at 4.80 per cent.

However, for the nine-month period of April 2017-January 2018, industrial production grew 4.1 per cent and manufacturing just 4.3 per cent.

"The downward move in inflation is on the back of seasonal food price reduction".

Manufacturing sector, which accounts for more than three-fourths of the entire index soared 8.7 percent in January as compared with 8.5 percent in December, led by an improved production of consumer durables and continued double-digit growth of consumer non-durables as well as capital goods.

Factory output measured by the index of industrial production (IIP) is the closest approximation for measuring economic activity in the country's business landscape. While the manufacturing sector grew 8.7% in January, compared with 2.5% in the same month previous year, capital goods grew 14.6% and consumer non-durables 10.5% in the month under review.

"When it comes to consumer inflation, 4.4% in February may be lower than January, the undercurrent remains biased on the upside, making RBI disinclined towards any rate cut, though the industry would like it to happen", it said in a statement. Consumer non-durable goods, which are mainly fast moving consumer goods, also recorded an increase of 10.5 per cent as against a growth of 9.6 per cent 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. Particularly heartening is the third consecutive month of double digit growth recorded by the capital goods sector a proxy for investment demand. It looks like post-demonetisation and GST implementation finally the industrial sector is gaining traction.

Chandrajit Banerjee, director general, CII said: "The visible improvement in industrial output, which rose to 7.5 per cent at the onset of the New Year as against 3.5 per cent last year, augurs well for the return of broad based recovery in industrial performance during the year".

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