India CPI Inflation, IIP Growth Rate: The country’s retail inflation, measured by the Consumer Price Index (CPI), eased to 4.29 per cent in the month of April. Separately, India’s factory output, measured in terms of the Index of Industrial Production (IIP), witnessed a growth of 22.4 per cent in March, two separate data released by the Ministry of Statistics & Programme Implementation (MoSPI) showed on Monday.
The retail inflation during the month of March was at 5.52 per cent.
According to a recent Reuters poll, retail inflation was expected to have eased to a three-month low of 4.20 per cent in April.
This is the fifth consecutive month that the CPI data has come within the Reserve Bank of India’s (RBI) upper margin of 6 per cent. The government has asked the central bank to maintain retail inflation at 4 per cent with a margin of 2 per cent on either side for a five-year period ending March 2026.
The retail inflation data is primarily factored in by the RBI during its bi-monthly monetary policy. In its previous policy meeting held in April, the Monetary Policy Committee (MPC) of the central bank had kept the repo rate unchanged for the fifth time in a row at 4 per cent while maintaining an ‘accommodative stance’ as long as necessary to mitigate the impact of the COVID-19 pandemic.
The easing of the retail inflation last month can be attributed to the softening of food prices. The Consumer Food Price Index (CFPI) or the inflation in the food basket eased to 2.02 per cent in the month of April, down from 4.87 per cent in March, the data revealed.
The month-on-month fall in the food basket was led by the softening of vegetable prices which fell -14.18 per cent in April, while cereals and products slipped -2.96 per cent, the data showed. Sugar and confectionery items too fell -5.99 per cent.
On the other hand, prices of oils and fats rose a whopping 25.91 per cent, while that of meat and fish rose 16.68 per cent. Non-alcoholic beverages gained 15.20 per cent while pulses and products segment also witnessed a rise of 7.51 per cent and egg prices too rose 10.55 per cent.
Reacting to the CPI data, Deepthi Mathew, Economist at Geojit Financial Services, said, “Lower food prices aided the overall inflation rate to cool to 4.29 percent. Vegetable prices registered a decline of 14.18 percent in April. The forecast of normal monsoon could help keep food prices in check. Yet, the supply-side disruption caused by localized lockdowns is a concern. RBI would keep the rates on hold as there is uncertainty on the inflation trajectory.”
Index of Industrial Production (IIP)
The factory output witnessed a growth of 22.4 per cent on-year to 143.4 during the month of March, separate data released by the MoSPI showed.
According to the data, the IIP had shrunk (-)18.7 per cent in March 2020.
In the fiscal year 2020-21 (April-March), the industrial sector saw a contraction of (-)8.6 per cent, compared to a (-)0.8 per cent fall year ago, the data showed.
“It may be noted that since national lockdown to control the spread of COVID 19 pandemic was announced from the end of March 2020, the indices were much lower in March 2020,” the government release said.
Industrial production has been affected mostly since March last year due to the COVID-19 pandemic which has led to lockdowns across various states and led to the delay of the economic recovery.
The growth in IIP during March is on account of the manufacturing, electricity and mining sectors. The manufacturing sector saw a growth of 25.8 per cent on-year to 140.4 in March, while the electricity sector saw a rise of 22.5 per cent to 180.0. The mining sector too rose 6.1 per cent to 139.0, the MoSPI data showed.
In the corresponding month year ago, the manufacturing sector had contracted -22.8 per cent, the mining sector had witnessed a fall of -1.3 per cent and the electricity sector had declined -8.2 per cent.
