Inflation rate for “pan, tobacco and intoxicants” eased to 7.34 per cent in February, while housing inflation was recorded at 8.28 per cent in February. Economists had expected consumer prices to rise by 0.2%.
“The indexes for shelter, apparel, and motor vehicle insurance all rose and contributed to the 1-month seasonally adjusted increase in the all items index”, the report said.
Meanwhile, riding on the back of robust manufacturing sector output, India’s industrial production sustained the growth momentum to rise 7.5 percent in January, indicating early signs of industrial revival.
The Consumer Price Index, which tracks the costs of household goods and services, rose 0.2 per cent for the month, which matched analyst expectations but was down from January’s sharp 0.5 per cent gain.
February inflation fell to a 4-month low of 4.44 per cent – still above the RBI’s target of 4 per cent – on cheaper food articles and lower cost for fuel. In fact, the exceptional 1.7% increase in prices for clothing observed in January – the highest monthly increase since February 1990 – was probably owed to the winter weather, whereas price discounts were more likely again in February given the mild temperatures.
India’s retail inflation eased for the second straight month in February but remained above the 4 percent medium-term target of the Reserve Bank of India (RBI), strengthening views it will hold rates steady at its April meeting rather than raise them. It sees gross value added – a key measure of growth – increasing 7.2% next fiscal year from 6.6% this year.
The IIP growth in January this year was mainly on account of an uptick in the manufacturing sector which constitutes 77.63 per cent of the index.
Tame core goods prices (only 0.1% this month, and -0.5% yr/yr) continue to keep inflation at bay, a reflection of the remaining global economic slack offsetting a tightening U.S. economy.
Tuesday’s economic report calendar was dominated by the Consumer Price Index (CPI) for February released by the U.S. Department of Labor.
The mining sector, however, was a laggard at 0.1% growth compared to 8.6% a year ago. Kroger said on Thursday that it will use one-third of its tax cut to boost shareholder returns, but the other two-thirds will go to higher wages and lower prices.
JPMorgan said that softening of inflation was nearly entirely underpinned by food prices. It was much lower at 2.01 per cent in February 2017. While the manufacturing sector grew 8.7% in January, compared with 2.5% in the same month previous year, capital goods grew 14.6% and consumer non-durables 10.5% in the month under review. “Looking ahead, we expect that industrial performance would be on a clear up slope with both consumption and investment picking up pace during the year”.