In what could give the Reserve Bank of India (RBI) greater room to slash key interest rates, retail inflation softened further to a four-month low of 4.87 per cent in April.
In what could give the Reserve Bank of India (RBI) greater room to slash key interest rates, retail inflation softened further to a four-month low of 4.87 per cent in April compared to 5.25 per cent in March. On the other hand, factory output growth slowed to a five-month low of 2.1 per cent in March as against 5 per cent registered in February.
The index of industrial production (IIP) data, which gauges the economic activities of the country, released on Tuesday showed that the lower growth was mainly due to falling consumption demand and moderation in electricity generation. The data showed that the manufacturing sector grew 2.2 per cent in March compared to 5.2 per cent in the previous month and -1.3 per cent in March 2014. Electricity generation grew 2 per cent during the month as against 5.9 per cent registered in February 2015 and 5.4 per cent, respectively during March 2014.
With regards to the consumer price index (CPI), prices of food items, vegetables and fruits moderated. The price rise in fruits and vegetables stood at 5.08 per cent (compared to 7.41 per cent in March 2015) and 6.63 per cent (compared to 11.26 per cent in March 2015), respectively. Similarly, the rate of price rise in cereals and products was 2.15 per cent compared to 2.32 per cent in March, while inflation in milk and its products was at 8.21 per cent compared to 8.35 per cent in the previous month.
Concerned over the tepid growth, industry urged the RBI to slash interest rates while it seeking government’s intervention in removing infrastructure bottlenecks.
“While it is reassuring to see the positive growth in manufacturing for 2014-15 but the growth remains tepid. Critical constraints for the sector like high interest rates, infrastructure bottlenecks, low domestic and export demand are an area of concerns for the sector and may continue to impact the growth of the sector in coming months,” Jyotsna Suri, president, Ficci, said.