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  1. Double bonanza for economy: February CPI inflation eases to 4.44%; January IIP up 7.5%

Double bonanza for economy: February CPI inflation eases to 4.44%; January IIP up 7.5%

The CPI inflation in the month February eased further to 4.44% from previous month’s 5.1% on the back of lower food prices. Meanwhile, January IIP has also surged from December's 7.2% to 7.5%.

By: | Updated: March 12, 2018 7:19 PM
Double bonanza for the economy: January CPI inflation eases to 4.44%; December IIP up 7.5%. (Image: Reuters)

The CPI inflation in the month February eased further to 4.44%  from previous month’s 5.1% on the back of lower food prices but continues to remain higher than the 4% target of the Reserve Bank of India. The inflation of the month of February has beaten ET Now poll prediction of 4.6%. Meanwhile, January IIP has also surged from December’s 7.2% to 7.5%.

Last month the inflation had eased from a 13-month-high after food and vegetable prices moderated overcoming the loss caused due to unseasonal rains. The CPI food inflation for the month of February has been recorded 3.26% down from 4.7% in January.

“This easing appears to have come largely on the back of a slowdown in the food price inflation on account of one-off seasonal factors. However, some uptick in core inflation was recorded but that was counterbalanced by the decline in food inflation,” Richa Gupta, Senior Economist at Deloitte India said.

Whether this easing sustains or not depends on multiple factors, including the agricultural production as well as the threat of rising crude oil prices on the back of further output cuts

“Today’s numbers will be a positive catalyst for the markets in the near-term. Yields are likely to enjoy a short-term relief, helped also by RBI’s liquidity injection to meet end-quarter/end-fiscal year squeeze,” Radhika Rao, India Economist, DBS Bank said.

Meanwhile, the CPI inflation for food and beverages in February has been recorded at 3.38% as compared to 4.58% in January. The CPI inflation for fuel and light for February, on lower international crude oil prices, was 6.8% as compared to 7.73% in January.

The January IIP expanded on the back of higher manufacturing and electricity production output. The January manufacturing output was recorded 8.7%, up from previous month’s 8.5%, while the electricity production was recorded 7.6% from December’s 4.4%.

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