Grocery items are displayed for sale in a market, in New Delhi. Image used for representation purpose only. | Photo Credit: Sushil Kumar Verma
India’s retail inflation eased to 4.7% in April, remaining below the Reserve Bank of India’s 6% tolerance threshold for price increases for the second consecutive month, helped by base effects from last April when it reached an eight-year high of 7.8% .
Retail inflation based on the Consumer Price Index (CPI) was 5.66% in March 2023 and 7.79% last year. Retail inflation in April was the lowest since October 2021 when it stood at 4.48%.
According to the National Statistical Office, inflation in the food basket was 3.84% in April, against 4.79% in March and 8.31% last year.
Retail inflation rose from 5.7% in December 2022 to 6.4% in February 2023 on the back of higher prices of cereals, milk and fruits and slower deflation in vegetable prices.
The Reserve Bank of India projects CPI inflation at 5.2% for FY2023-24, with 5.1% in Q1, 5.4% in Q2, 5.4% in Q3, and 5.2% in Q4, and the risks are even which is balanced.
Industrial output skid
Industrial output growth fell to a five-month low of 1.1% in March 2023 sharply from 5.8% in February, with electricity, consumer durables and non-durables recording contraction from last year, and manufacturing grows only 0.5%
Mining output grew 6.8% in March, while capital goods and infrastructure/goods production rose 8.1% and 5.4%, respectively. The output growth of primary products, however, more than halved from 6.9% in February to 3.3% in March. Intermediate goods grew at a tepid 1.1% pace, but this constituted a three-month high after growth of 0.5% in January and 0.7% in February.
Electricity generation contracted 1.6% in March, marking the first decline in at least a year. The drop in power output follows three months of 10%-plus growth from November 2022 and an 8.2% uptick this February.
For the full year 2022-23, India’s industrial production increased by 5.1%, compared to an 11.4% increase in 2021-22. Electricity generation rose 8.9% over the year with mining and manufacturing up 5.8% and 4.5%, respectively.
Output of consumer durables shrank for a fourth straight month, with the decline widening to a three-month low of 8.4%. The production of consumer durables fell by 11.2% in December, 8.2% in January and 4.07% in February.
Total consumer durables as well as consumer non-durables’ output grew by just 0.5% in 2022-23. The latter saw its first production contraction in March in five months, falling 3.1%. Both these segments registered declines in March 2022 as well, with durables shrinking by 3.1% and non-durables down by 4.4%.
Broken down by end-use, capital goods grew the fastest in 2022-23 at 12.9%, followed by infrastructure/construction goods (8%) and primary goods (7.4%). Intermediate goods increased by 3.7%, compared to 15.4% in 2021-22.
“The Index of Industrial Production or IIP growth of 1.1% in March was a big disappointment as we were expecting a better number of 3.5%,” said Madan Sabnavis, chief economist at Bank of Baroda. “The usual year-end phenomenon of production ramping up in March did not happen this time. The IIP numbers are also not in line with the Purchasing Managers’ Index (PMI) indicators, so we have to look at the PMI readings with caution,” he stressed.
(With inputs from PTI)