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| India's Economic Indicators: Inflation Trends and Industrial Growth |
India’s consumer price index (CPI)-based inflation eased to 5.09 percent in February 2024, according to data released by the Ministry of Statistics and Programme Implementation. Here's a summary of the key points:
Inflation Remains Within RBI’s Tolerance Range:
The retail inflation rate had previously eased to 5.1 percent in January 2024 from 5.69 percent in December 2023, staying within the RBI’s tolerance level of 2-6 percent for six consecutive months.
However, the headline number has exceeded the medium-target rate of 4 percent for the 53rd consecutive week.
Rural and Urban Inflation:
Rural inflation stood at 5.34 percent in February, unchanged from January, while urban inflation eased marginally to 4.78 percent.
Food and Beverage Inflation:
The food and beverage sector recorded an inflation rate of 8.66 percent in February, contributing to the overall inflation rate.
Implications for Monetary Policy:
The latest inflation data comes ahead of the RBI’s MPC meeting in April. Despite policy rates being at their highest level in nearly eight years, economists expect the MPC to ensure inflation falls to acceptable levels.
Core Inflation and Sequential Price Momentum:
Core inflation fell to 3.3 percent in February from 3.6 percent in January. Sequential price momentum was largely subdued in February.
Outlook for March Inflation:
Vegetable prices continued to decline in the first two weeks of March, along with lower prices of cereals and edible oils. Reduction in LPG prices is expected to reduce headline inflation in March.
Industrial Production Growth:
India’s industrial production grew by 3.8 percent in January 2024, lower than the 5.8 percent expansion recorded in January 2023.
Sector-wise, manufacturing output grew by 3.2 percent, mining by 5.9 percent, and power output by 5.6 percent in January 2024.
Cumulative Growth:
From April 2023 to January 2024, the IIP grew by 5.9 percent compared to a 5.5 percent expansion in the corresponding period of the previous year.
These economic indicators suggest a mixed picture, with inflation showing signs of easing but remaining a concern, while industrial growth has moderated compared to the previous year.