Millennium Post

At capital 5.01%... spectre of inflation returning?

The Consumer Price Index-based inflation was at 4.87 per cent in April 2015. The retail inflation was 8.33 per cent in May 2014. Prices of pulses rose by 16.62 per cent in May 2015 over the same month last year, according to the data released by the Ministry of Statistics & Programme Implementation on Friday.

Domestic pulses production fell by nearly two million tonnes in 2014-15 crop year due to unfavourable weather conditions such as untimely rains. The Reserve Bank, which tracks retail inflation as a benchmark for its monetary policy, said earlier this month that price rise was still a worry for the central bank. RBI expects inflation to rise to 6 <g data-gr-id="30">per cent</g> by January 2016.

The overall food inflation fell to 4.8 <g data-gr-id="27">per cent</g> during the month, from 5.11 <g data-gr-id="28">per cent</g> in April 2015. The food inflation was at 8.89 <g data-gr-id="29">per cent</g> in May 2014. The inflation for fruit and vegetables was 3.84 per cent and 4.64 per cent, respectively, in May 2015.

Among others, milk and its products were costlier by 7.43 per cent in May 2015 over the same month last year. Prices of protein-rich items such as ‘meat and fish’ rose by 5.43 per cent, while spices turned costlier by 8.82 per cent in the month. 

Prices of prepared snacks and meals rose by 7.89 per cent, clothing and footwear category by 6.12 per cent, housing by 4.64 per cent and fuel and light by 5.96 per cent. Of the other categories, oils and fats prices rose by 1.95 per cent, cereals and products by 1.98 <g data-gr-id="34">per cent</g>, while that of egg declined by 0.78 <g data-gr-id="35">per cent</g> in May 2015.

Commenting on the May inflation data, ratings agency ICRA said, “The marginal uptick in CPI inflation for May 2015 is in line with our expectations, given the considerable upward revision in fuel prices during that month. “Following the rate cut in the June 2015 RBI policy review, we expect an extended pause until the extent of the monsoon shortfall and its impact on food inflation become clear.” 

Industrial output grows at 4.1% in April
 Industrial production grew at a two-month high of 4.1 per cent in April, primarily driven by the manufacturing sector, but capital goods growth slowed. The factory output, measured by the Index of Industrial Production (IIP), was 3.7 <g data-gr-id="62">per cent</g> in April 2014. The industrial growth for March too has been revised upwards to 2.5 per cent from 2.1 per cent, as per the data released by the government on Friday. Manufacturing output, which constitutes over 75 <g data-gr-id="63">per cent</g> of the index, grew at <g data-gr-id="72">higher</g> rate of 5.1 <g data-gr-id="64">per cent</g> in April as against 3 per cent in the same month last year. The production of capital goods, a barometer of demand, however, grew at a slower pace of 11.1 <g data-gr-id="65">per cent</g> in April as against 13.4 per cent in the same month last year. 

In April this year, mining sector too grew at a slower rate. The growth was 0.6 per cent as against 1.7 per cent in April last year. On the other hand, electricity production contracted by 0.5 <g data-gr-id="66">per <g data-gr-id="75">cent</g></g><g data-gr-id="75">,</g> while it had expanded by 11.9 <g data-gr-id="67">per cent</g> in the same month last year. In terms of industries, 16 out of the 22 industry groups in the manufacturing sector have shown positive growth during April compared with the corresponding month previous year. The industry group ‘Machinery and equipment’ has shown the highest positive growth of 20.6 per cent, followed by 16.2 <g data-gr-id="69">per cent</g> in ‘wood and products of wood and cork except furniture’, the data said. On the other hand, the industry group ‘office, accounting and computing machinery’ has shown the highest negative growth of 36.5 per cent, followed by 34 per cent in ‘radio, TV and communication equipment and apparatus’.
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