Millennium Post

Feb retail inflation rises to 5.37%, Jan factory output growth to 2.6%

The consumer price based retail inflation (consumer price index or CPI) for February is calculated with a new base year of 2012. For January, the retail inflation with a new base year has been revised upwards to 5.19 per cent from 5.11 per cent estimated earlier. The CPI in February last year was 7.88 per cent.

Food inflation during the month under review rose to 6.79 per cent from 6.06 per cent in January. The rise in inflation in food items was mainly due to costlier vegetables, pulses and beverages.

The rate of price rise in vegetables went up by 13.01 per cent; in pulses and products by 10.61 per cent, while the same in the food & beverages category rates moved up by 6.76 per cent. Inflation in fruits was 8.93 per cent. For rural segment, retail inflation was 5.79 per cent in February 2015 and that for urban centres 4.95 per cent.

Among others, retail inflation in cereals and products grew to 2.91 per cent, meat and fish at 5.05 per cent. For pan, tobacco & intoxicants category, the rate of price rise was 9.24 per cent in February.

For eggs, inflation dipped further to 1.06 per cent during the month over a negative price rise of 0.24 per cent in the previous month. Likewise, for category under transport and communication, inflation fell to 2.16 per cent. “Retail inflation has come in line with market expectations. We expect inflation to move in a narrow trajectory going forward and stay within the comfort zone of the RBI and the government. “This would give the RBI adequate headroom to substantially cut policy rates in the next fiscal year, which will in turn facilitate revival of the investment cycle,” Angel Broking said in a statement.

Meanwhile, industrial production grew 2.6 per cent in January mainly on account of improvement in manufacturing activity and better offtake of capital goods.

The growth in factory output, as measured by the Index of Industrial Production (IIP), was 1.1 per cent in January 2014. For the April-January period of 2014-15, IIP grew 2.5 per cent as against a meagre rise of 0.1 per cent in same period of the last fiscal as per the data released by Central Statistics Office (CSO) on Thursday.

Meanwhile, the December IIP has been revised upwards to 3.23 per cent from the provisional estimates of 1.7 per cent released last month. As per government data released today,
manufacturing output, which constitutes over 75 per cent to the index, grew by 3.3 per cent in January compared to a meagre growth of 0.3 per cent in the same month a year ago.

For April-January period, the sector saw an output growth of 1.7 per cent, compared to a contraction of 0.3 per cent in the year-ago period. The production of capital goods, a barometer of demand, grew by 12.8 per cent in January as against a contraction of 3.9 per cent in same month of last year.

During the April-January period, capital goods output grew by 5.7 per cent as against a dip of 0.8 per cent. Fourteen out of the 22 industry groups in the manufacturing sector have shown positive growth during the month of January year-on-year.

CAD will narrow to 1.2% of GDP this fiscal: SBI Research

India’s current account deficit is expected to come down to $25 billion, or 1.2 per cent of GDP, in the current financial year, says a report.

CAD, the difference between the inflow and outflow of foreign exchange, in the last fiscal stood at $32.4 billion, or 1.7 per cent of the GDP, while it hit a record high of $88 billion, or 4.7 per cent of the GDP, in 2012-13. According to a research report by leading public sector lender SBI, the current account deficit is likely to fall in FY 2015 but could widen next fiscal on the back of pick up in the Indian economy.

“We expect, FY15 CAD to narrow down further to below $25 billion (1.2 per cent of GDP). FY16 may see the CAD widening close to 2 per cent of GDP, with the economy picking up,” the SBI’s economic research department said. The current account deficit (CAD) narrowed to $8.2 billion (1.6 per cent of GDP) in Q3 FY15 from $10.1 billion (2.0 per cent of GDP) in Q2. CAD has narrowed to 1.7 per cent of the GDP for the first nine months of the current fiscal, driven down by lower oil prices and higher services exports that offset the dip in merchandise shipments.
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