IIP up, inflation eases while industry calls for RBI rate cut

The Reserve Bank of India (RBI) is scheduled to come out with next monetary policy review on April 5, 2018. It had kept the policy rate unchanged in its February review on fears of inflation.

According to the data released by the Central Statistics Organisation (CSO), retail inflation measured in term of Consumer Price Index fell to a four-month low of 4.44 per cent in February on cheaper food articles and lower cost for fuel.

Retail inflation was 5.07 per cent in January. In February 2017, however, it was 3.65 per cent.

Observing that retail inflation has softened on account of a downswing in food prices, industry chamber CII said, "This should spur the RBI to resume its rate easing cycle to give a boost to the nascent recovery currently underway in the economy."

Industrial production grew at 7.5 per cent in January 2018 against 3.5 per cent in the year ago on account of good performance by manufacturing coupled with higher offtake of consumer and capital goods.

The Index of Industrial Production (IIP) had grown at 7.1 per cent in December 2017, according to the data released by the CSO today.

"The strengthening of the manufacturing sector for the second month in a row signals that industry is bouncing back from GST-related glitches and could be on track to reap the benefits of domestic and global growth recovery," CRISIL said.

The IIP growth in January this year was mainly on account of uptick in manufacturing sector which constitutes 77.63 per cent of the index. It grew by 8.7 per cent during the month as compared to 2.5 per cent in January 2017, showing signs of recovery in the economy.

Capital goods, a barometer of investments, showed a sharp increase in output by 14.6 per cent in January 2018 as against a decline of 0.6 per cent year ago.

Consumer non-durable goods, which are mainly fast-moving consumer goods, too showed an increase of 10.5 per cent as against a growth of 9.6 per cent. Consumer durable goods recorded a growth rate of 8 per cent in January 2018 against a contraction of 2 per cent a year ago.

However, the mining sector saw a flat growth of 0.1 per cent compared to 8.6 per cent a year ago.

As per use-based classification, the growth rates in January 2018 over January 2017 are 5.8 per cent in primary goods, 4.9 per cent in intermediate goods and 6.8 per cent in Infrastructure/ Construction Goods.

In terms of industries, 16 out of 23 industry groups in the manufacturing sector showed positive growth during January 2018.

IIP grew at 4.1 per cent in April-January this fiscal as compared to 5 per cent in same period in previous financial year.

On IIP numbers, industry chamber Assocham said that it would be safe to assume that a lot of advantage has accrued because of the low base effect of the previous year when the growth had plunged following demonetisation.