Published: Wed, March 14, 2018
Finance | By Claude Patterson

Inflation falls to 4.4 per cent, factory growth rises

Inflation falls to 4.4 per cent, factory growth rises

New Delhi- India's factory production grew in January to 7.5 per cent over the same month a year ago, and marginally over the 7.1 per cent recorded in December 2017, official data showed on Monday.

Industrial production grow at a high rate of 7.5 per cent in January 2018 against 3.5 per cent in the year-ago month on the back of firm manufacturing sector coupled with higher offtake of consumer and capital goods. The energy index rose 7.7% in the last twelve months. In the 12 months through February, the CPI rose 2.2 percent, up from 2.1 percent in January as the flat reading from previous year dropped from the calculation.

The benchmark 10-year U.S. Treasury note yield stood little changed at 2.879 per cent.

As inflation slowly makes its way into the supply chain, retail apparel prices increased 1.5% in February following a 1.7% rise in January, the U.S. Bureau of Labor Statistics reported Tuesday in its Consumer Price Index (CPI).

"Tame core goods prices continue to keep inflation at bay, a reflection of the remaining global economic slack offsetting a tightening USA economy", he said. Trader's await this week's inflation numbers, following Friday's softer than expected wage data which showed a decline from January.

The news could help ease volatility on Wall Street, where fears of inflation and rising rates have spooked investors in recent weeks.

Fed officials target 2% annual inflation based on a separate index, the Commerce Department's gauge linked to consumer spending.

On the factory output growth, SBI said it may touch a double-digit growth for the first time in February. Signs of a thaw in rural demand were visible with rural CPI crashing by 84 basis points from the earlier month, ' the report stated. Moreover, the manufacturing which has a weight of 77.63 per cent in the IIP is showing the sustenance of the growth momentum.

In this environment, the strong Eurozone current account position continued to provide important underlying euro support, with a further push higher to the 1.2400 area. "Mining sector is a dampener in IIP data and may be cause of concern from mining related industries", Devendra Kumar Pant, chief economist, India Ratings and Research said. In February 2017, however, it was 3.65 per cent.

The industry group "Manufacture of other transport equipment" has shown the highest positive growth of 33.1 percent followed by 27.8 percent in "Manufacture of furniture" and 26.6 percent in "Manufacture of motor vehicles, trailers and semi-trailers".

"Looking ahead, we expect that industrial performance would be on a clear up-slope with both consumption and investment picking up pace during the year", CII Director General Chandrajit Banerjee said.

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