- The inflation figure in March is within the RBI's comfort zone as it is below 6%.
- According to the National Statistical Office, the inflation in the food basket was 4.79% in March.
- The
retail inflation rose to 6.4% in February 2023 due to inflation in cereals, milk, fruits, and slower deflation in vegetable prices.
Retail inflation fell to a 15-month low of 5.66% in March, mainly due to a decline in food prices, government data showed on Wednesday. The inflation figure in March is within the RBI's comfort zone as it is below 6%.
The retail inflation based on Consumer Price Index (CPI) was 6.44% in February 2023 and 6.95%in the year-ago period. The retail inflation rose from 5.7% in December 2022 to 6.4% in February 2023 on the back of higher inflation in cereals, milk and fruits, and slower deflation in vegetables prices.
According to the National Statistical Office (NSO), the inflation in the food basket was 4.79% in March, as against 5.95% in February and 7.68% in the year-ago period.
“Inflation for cereals (mainly wheat) and milk have pushed inflation upwards while negative growth in the case of vegetables and edible oils has brought it down. Fruits and spices too witnessed a high increase of 7.6% and 18.2% respectively. This trend will continue in the coming months as there are expectations of wheat prices rising in case there is a shortfall in production this season,” said Madan Sabnavis, chief economist at Bank of Baroda.
All the major categories registered higher than 5% with the highest being fuel and light at 8.9% and clothing and footwear at 8.2%. Clothing inflation is higher due to higher cotton and man-made fibre cost along with power costs. Fuel and lighting expenses have gone up mainly due to the increase in prices of LPG, which has been invoked by the government.
“The miscellaneous category which dominates the core inflation segment witnessed inflation of 5.8% pushed up by household goods, health, and personal care. Higher prices of gold have contributed to this increase in inflation here as also the tendency of companies to pass on higher input costs to the consumer,” Sabnavis added.
The Reserve Bank of India has projected the CPI inflation at 5.2% for FY24, with 5.1% in Q1, 5.4% in Q2, 5.4% in Q3, and 5.2% in Q4, and risks evenly balanced.
“The price pressure on non-food and fuel categories continues to remain sticky. Price growth in categories such as clothing, household goods and services etc have continued to remain elevated. Thus, this dents the household’s disposable income, reducing their spending capacity,” said Vivek Rathi, director-research at Knight Frank India.
Rathi also believes that even as wholesale prices declined, the producers are unlikely to pass this price reduction to maintain their profit margins. “There are multiple factors pressurising consumer inflation which are more likely to sustain at least in the medium term,” he adds.
Industrial production rises 5.6% in February
India's industrial production rose 5.6% in February this fiscal, according to official data released on Wednesday. Factory output measured in terms of the Index of Industrial Production (IIP) grew 1.2% in February 2022.
The data released by the NSO showed that the manufacturing sector's output increased 5.3% in February 2023.
Mining output rose 4.6% and power generation surged 8.2% during the month under review.
(With PTI inputs)