IIP at two-month high in January; February retail inflation eases

  • IIP at two-month high in January; February retail inflation eases

IIP at two-month high in January; February retail inflation eases

In February, consumer food price index softened to 3.26 per cent as against 4.7 per cent in January.

"The RBI will have room to push back a rate hike, but not for too long as input price pressures have been on the rise over the past one year, and price pass-through to consumers is now taking place", said Teresa John, economist at Nirmal Bang Pvt. The headline CPI reading of 2.2% in February was basically in line with expectations, but removing the food and energy components for a core annualized inflation reading of 1.8% was the victory.

However, economists at the country's largest lender State Bank of India (SBI) said that the "best is yet to come" and the RBI's inflation targets will be undershot by up to 0.50 percentage points.

Year-over-year, the index posted a 2.2 per cent gain, above the 2.1 per cent recorded in January.

Apparel prices continued to march higher, rising 1.5 percent in February after surging 1.7 percent in January. February's data is an indication that prices are at a safe distance from the apex bank's upper tolerance level of inflation at 6 percent.

Compared to the same month a year ago, consumer prices were up by 2.2% in February, reflecting a modest acceleration from the 2.1% increase in January.

US consumer prices continued to firm in February, indicating inflation is creeping up toward the Federal Reserve's target without the kind of breakout that would warrant a faster pace of interest-rate hikes. January saw annual consumer inflation of 5.1 percent, off the December figure of 5.2 percent, which was the highest rate in 17 months.

Further, the cumulative growth for the period April - January 2017-18 over the corresponding period of the previous year stands at 4.1 percent. The index for all items less food and energy rose 1.8 percent over the past year, while the energy index increased 7.7 percent and the food index advanced 1.4 percent. It expects gross value added - a key measure of growth - to increase 7.2 percent next fiscal year from 6.6 percent this year.

These were partly offset by a decline in medical costs, with hospital care and prescription drugs both falling in addition to a 0.5 per cent drop in mobile phone plan prices, the second monthly decline in a row.

Industrial production grew at 4.1% in April-January, compared to 5% in the same period of the previous financial year. Strong IIP growth of 7.5 percent in January; capital goods grow by 14.6 percent; manufacturing at 8.7 percent; infrastructure/construction goods at 6.8 percent.

OECD said,"Tax reductions and higher government expenditure reinforce the momentum in domestic demand from strong confidence, solid job creation, past gains in household wealth and the rebound in oil production".