Published: Mon, March 12, 2018
Finance | By Claude Patterson

Retail Inflation Eases To 4-Month Low; Industrial Output Soars To 7.5%

Retail Inflation Eases To 4-Month Low; Industrial Output Soars To 7.5%

The all-India general CPI inflation dipped to four-month low of 4.44% in February 2018 (new base 2012=100), compared with 5.07% in January 2018.

The average daily output of Dutch manufacturing industry advanced 7.1 percent year-over-year in January, faster than the 5.6 percent gain in December. Registering a 25-month-high, the industrial growth had grown 8.8 per cent in November.

As many as 16 of the 23 industry groups registered positive growth during the month when compared to the corresponding period in 2017. "The government demand picked up post last year's Budget and it is now having an effect on infrastructure and primary goods".

Considering the above mentioned factors, RBI now estimate inflation to be at 5.1% in Q4, including the HRA impact.

Growth in infrastructure and construction quickened slightly to 6.8% in January from 6.68% in the previous month.

Consumer durables recorded a growth rate of 8 per cent as against a decline of 2 per cent in the same month a year ago.

"The only concern is that the Purchasing Managers' Index data for February showed a weakening so one has to wait and watch", Mr. Srivastava said. It also estimated the retail inflation for 2018-19 in the range of 5.1-5.6 percent during April-September and 4.5-4.6 percent in the second half of the year.

The inflation for clothing and footwear increased to 5.00%, while the CPI inflation of fuel and light eased to 6.80% in February 2018.

Inflation softened last month mainly on account of cheaper food prices and lower cost for fuel.

"Whether this easing sustains or not depends on multiple factors, including the agricultural production as well as the threat of rising crude oil prices on the back of further output cuts".

Though it will give comfort to the Centre that had been under pressure after demonetisation, implementation of Goods and Services Tax and the Punjab National Bank scam, experts expect the Reserve Bank of India to maintain a status quo on rates.

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