Published: Tue, March 13, 2018
Markets | By Erika Turner

CPI inflation eases to 4.44% in February 2018; food inflation at 3.26%

CPI inflation eases to 4.44% in February 2018; food inflation at 3.26%

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.

IIP grew at 4.1% in April-January this fiscal as compared to 5% in same period in previous financial year.

Factory output measured by the index of industrial production (IIP) is the closest approximation for measuring economic activity in the country's business landscape.

The IIP growth in January this year was mainly on account of uptick in manufacturing sector which constitutes 77.63 percent of the index.

However, for the nine-month period of April 2017-January 2018, industrial production grew 4.1 per cent and manufacturing just 4.3 per cent.

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At 4.44 per cent, the inflation rate based on Consumer Price Index (Combined) for February is sharply lower than the 5.1 per cent inflation rate estimated by the Reserve Bank of India (RBI) for the January-March quarter.

Major indicators of CPI eased down in the February 2018 month, with food & beverages at 3.38%, pan, tobacco & intoxicants at 7.34%, clothing & footwear at 5%, housing at 8.28%, fuel & light at 6.68% and miscellaneous at 3.85%.

Slower inflation may also dissuade the central bank from taking a hawkish stance in the upcoming monetary policy review on 5 April.

Analysts polled by Reuters had predicted February's rate would ease to 4.8% from 5.1% in January. Consumer non-durable goods, which are mainly fast moving consumer goods, also recorded an increase of 10.5 per cent as against a growth of 9.6 per cent past year. Even at the use based classification the growth is broad based as with the exception of intermediate goods all other segments have shown growth either in high single digit or greater than high single digit. Capital goods, which point to rising investment demand in the economy, recorded positive growth for the sixth straight month, growing at 14.6%, signalling a revival in private investment. In all 16 out of 23 industry groups in the manufacturing sector showed growth in January.

Mining activity's growth further plummeted, growing 0.1 percent in January following December's trend at 1.2 percent, as compared with a robust growth of almost 8.6 percent a year ago. "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.

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