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Retail inflation dips below 6%; IIP slightly up at 5.6% – Times of India

NEW DELHI: Retail inflation eased sharply in March on the back of moderating food prices and a favourable base effect and dipped below the 6% mark, while industrial output growth remained healthy in February, bringing much-needed cheer against the backdrop of a gloomy global economic outlook.
Data released by the National Statistical Office (NSO) on Wednesday showed inflation, as measured by the Consumer Price Index (CPI), rose an annual 5.7% in March, slower than the 6.4% in February and below the central bank’s upper band of comfort zone. The food price index was at 4.8%, lower than the near 6% in February. Rural inflation was lower at 5.5% while urban was at 5.9%.
Vegetable prices contracted by 8.5% while oils and fats declined 7.9%. Core inflation (excluding food and fuel) also moderated marginally during the month but still remains stubborn.
The Reserve Bank of India (RBI) had paused its rate hike cycle in its latest policy review earlier this month but governor Shaktikanta Das had cautioned that the war against inflation has to continue until RBI sees there is a durable decline in inflation closer to the target. He said that projections for 2023-24 point to a softening in inflation, though the disinflation is likely to be gradual and protracted, given the rigidity in core or underlying inflation pressures.
Experts said the RBI is likely to maintain a pause on interest rates for now.
“With CPI inflation expected to moderate in the coming months and an improvement in the household’s inflationary expectation, we can expect a status quo on RBI’s policy rate hike in FY24,” ratings agency CareEdge said in a note.
Separate data released by the NSO showed the Index of Industrial Production (IIP) rose 5.6% in February, marginally above an upwardly revised 5.5% in January. IIP growth in February 2022 was at 1.2%. While there was improvement across sectors, it was also helped by a weak base.
“Overall, growth in IIP is still fairly steady in rolling three-month average terms, though it remains to be seen whether the sequential decline will continue beyond February,” Barclays said.
Watch Inflation falls to a 15-month low of 5.66 per cent in March

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