Published: Thu, April 12, 2018
Medicine | By Douglas Stevenson

Inflation rate drops marginally to 13.34% in March

Inflation rate drops marginally to 13.34% in March

It indicated that the figures were 0.33 per cent lower from 15.93 per cent recorded in February. The rate of price rise in protein rich items like eggs, milk and other products too moderated in March as against the previous month.

In another set of data released by the government, industrial production in February slowed to 7.1 per cent from 7.5 per cent in January.

RBI has a mandate of achieving the medium-term target for consumer price index (CPI) inflation of 4% within a band of +/- 2 percentage points, while supporting growth. This year's budget is focused on rural welfare, in particular an increase to the guaranteed price for agricultural produce - called the minimum support price (MSP), which would be inflationary, they say.

Manufacturing sector, which constitutes over 77 per cent of the index, grew at 8.7 per cent in February as compared to nearly flat growth of 0.7 per cent in the same month a year ago.

According to them, on a month-on-month basis, the headline index increased by 0.84 per cent in March 2018, up by 0.05 percent points from the rate recorded in February.

The RBI has marginally revised downward its inflation projection for the current fiscal year 2018-19 to 4.7-5.1% in the first half and 4.4% in the second half.

However, inflation in fruits basket was higher.

The country's annual consumer price inflation quickened to 3.0% in 2017 from 1.2% in 2016.

It had crossed the 12-per cent mark in 2013, but has remained under control since, thanks to lower crude oil prices, tighter monetary policy and fiscal measures.

Fuel and light inflation stood at 5.7% in March compared to 6.8% in February. A greater challenge would be for the RBI to set policy sentiments correctly in the coming period as higher yields, inflationary pressures and election cycle in India and USA both are likely to lead to market volatility. "A generalized increase in food prices amid pick-up in rural economic activity could add to upside risks to core inflation going forward", said Garima Kapoor, economist, Elara Capital.

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