Consumer price inflation slowed to 4.83 per cent in March, the lowest reading in six months, government data showed.
The decrease in consumer price index was mainly due to the marginal easing of prices across most sectors, the most significant of which were the ‘food & beverages’ and ‘fuel & light’ segments.
India’s industrial output as measured by the Index of Industrial Production (IIP) snapped a three-month losing streak to clock 2 per cent growth in February, the data revealed.The IIP moved to positive territory due to strong growth in infrastructure and consumer durables sectors.
But experts said the industrial output numbers do not reflect sustainable recovery and the inflation trend could reverse in coming months.
“Talking of 2 per cent growth is disgraceful. Our industrial growth should be at 8 per cent or so if we want sustained GDP growth of 7.5—8 per cent. We need positive numbers for three consecutive months if this is to mean anything,” said Madan Sabnavis, Chief Economist, Care Ratings.
“We continue to have flat growth and the 11-month cumulative growth is only 2.6 per cent, which is lower than the 2.8 per cent seen last year,” he told The Hindu , stressing that industrial production remained stagnant.
The IIP data assumes significance coming on the back of other indicators—such as the Index of Eight Core Industries and the Manufacturing Purchasing Managers’ Index—also showing a pick-up in manufacturing activity.
The Reserve Bank of India recently cut interest rates by 25 basis points to spur demand in the economy.
The capital goods segment of the IIP continued to shrink in February for the fourth month in a row, declining 9.8 per cent. Similarly, output from the consumer non-durables sector dipped 4.2 per cent.
The manufacturing segment of the IIP returned to growth in February recording 0.73 per cent, following three months of contraction.
“This clearly shows that there is still very little momentum on capital expenditure and any sustainable increase in investments is still some time away,” Rishi Shah, Economist at Deloitte India, said.
“As has been the case over the past nine months, urban consumption growth has picked up and resulted in increased production of consumer durables.” The ‘food & beverages’ segment in the consumer price index came in at 5.3 per cent in March, down from 5.5 per cent in February and the ‘fuel & light’ segment came in at 3.4 per cent in March compared to 4.6 per cent in February.
“We are still seeing an increase in prices,” Mr. Sabnavis said regarding the consumer price index. “The rate has come down somewhat. But since the rabi harvest starts coming in from March and the Ministry of Agriculture has projected that it will be poorer than normal, we will have to see how inflation moves in the coming months.”
Electricity production, as measured in the IIP, grew by 9.6 per cent in February compared to 6.7 per cent in January
