New Delhi: Retail inflation declined to a five-month low of 4.85 per cent in March mainly due to cooling food prices, inching towards the Reserve Bank’s target of 4 per cent, while industrial production growth accelerated to a four-month high of 5.7 per cent in February 2024, mainly due to the good performance of the mining sector, according to official data released on Friday.
The Consumer Price Index (CPI) based inflation was previously at 5.09 per cent in February and 5.66 per cent in March 2023, with the last lowest rate recorded at 4.87 per cent in October 2023.
The food basket saw inflation at 8.52 per cent in March, slightly down from 8.66 per cent in February. Notably, inflation in eggs, spices, and pulses showed a month-on-month ease, although fruits and vegetables experienced a price uptick. The ‘fuel and light’ segment also witnessed lower inflation rates.
The RBI, which considers consumer inflation for its bi-monthly monetary policy, anticipates food price uncertainties to influence the inflation trajectory. It projects retail inflation at 4.5 per cent for the current fiscal year, assuming normal monsoon conditions. However, ongoing geopolitical tensions could pose risks to commodity prices and supply chains, potentially affecting inflation rates.
Inflation rates varied across regions, with rural India experiencing higher inflation at 5.45 per cent compared to the national average, while urban areas saw a lower rate of 4.14 per cent in March. Odisha recorded the highest inflation at 7.05 per cent, and Delhi the lowest at 2.29 per cent. The NSO gathers price data from a network of 1,114 urban markets and 1,181 villages across all states and union territories on a weekly basis. In March 2024, data collection covered 99.8 per cent of villages and 98.5 per cent of urban markets.
On the industrial front, India’s production growth accelerated to 5.7 per cent in February 2024, marking a four-month high, largely driven by the mining sector’s strong performance. The Index of Industrial Production (IIP) growth was 6 per cent in February 2023, with the previous peak at 11.9 per cent in October 2023.
The April-February period of 2023-24 saw IIP growth reach 5.9 per cent, a slight increase from 5.6 per cent in the same period the previous year. Mining output growth surged to 8 per cent in February, compared to 4.8 per cent in the year-ago month. However, the manufacturing sector’s output growth slowed to 5 per cent, and power generation growth decreased to 7.5 per cent.
The capital goods segment experienced a significant slowdown, with growth falling to 1.2 per cent in February 2024 from 11 per cent a year earlier. Conversely, consumer durables output expanded by 12.3 per cent, a stark contrast to the 4.1 per cent contraction in February 2023. Consumer non-durable goods output declined by 3.8 per cent, compared to a 12.5 per cent expansion in the previous year.