Retail inflation moderated to a three-month low of 5.1% in January due to a drop in prices of several items in the food basket — mainly onions, data released by the National Statistical Office (NSO) showed on Monday.
The Consumer Price Index (CPI)-based inflation came in at 5.69% in December 2023 and 6.52% in January 2023.
In December, retail inflation had shot up to a four-month high owing to a sharp rise in onion inflation, which was at 73.97% during the month. In January, however, onion inflation plunged to a five-month low of 29.59%.
Core inflation, which excludes food and fuel components of the CPI basket, plunged to a 50-month low of 3.6% in January from 3.9% in December, reflecting the ongoing pass-through of monetary policy actions by the Reserve Bank of India (RBI).
Separate data released on Monday showed that factory output growth, as measured by the Index of Industrial Production (IIP), rose to 3.8% in December from 2.4% in November.
This was primarily owing to a sharp uptick in manufacturing activity, which rose to 3.9% from 1.2% in December.
Within IIP, manufacturing activity soared on a sequential basis. During December, it rose 8.2% on month — the sharpest pace in 21 months. As a result, IIP, too, jumped sequentially by 7.4%, also at the highest pace in as many months.
Both mining and electricity sectors recorded a sequential uptick in activity during December, but their year-on-year growth was lower due to an unfavourable base.
The growth rates of the mining and electricity sectors were 5.1% and 1.2%, respectively, in December against 7.0% and 5.8% in November.
Within the use-based category, the year-on-year growth of five of the six sectors showed an increase from the levels in November.
But sequentially, all the sectors recorded higher production in January compared with December.
“The growth in both consumer durables and non-durables was positive (4.8%; 2.1%, respectively) in December as compared to a contraction in the previous month. However, it doesn’t hide the fact that consumption demand still remains muted,” India Ratings and Research (Ind-Ra) said in a note.
“Overall, the industrial output growth in Q3FY24 stood at 5.8%, down from a five-quarter high of 7.8% in Q2FY24, which could mean a moderation in the industrial GVA (gross value added) growth in October-December,” the agency added.