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Inflation eases in Feb, factory output surges to 7.5% in January

Author: IANS/Tuesday, March 13, 2018/Categories: Economy

Inflation eases in Feb, factory output surges to 7.5% in January

New Delhi - As manufacturing picked up pace, India's factory production growth in January at 7.5% doubled over the 3.5 recorded in the same month last year, even as retail inflation eased in February, official data showed.

Industry welcomed the "pick-up in growth trajectory" witnessed in the beginning of the calendar year.

The Index of Industrial Production (IIP), however, rose marginally over the 7.1% registered in December 2017, a Central Statistics Office (CSO) release said.

The cumulative IIP growth for the April-January period of the current fiscal, at 4.1%, was lower than the 5% posted in same period of 2016-17. 

In line with the recent trend of recovery in manufacturing, the sector, which constitutes 77.63% of the index, grew by 8.7% during January, as compared to 2.5% in the same month last year. 

Retail inflation for February eased down to 4.4%, compared to 5.07% in the previous month. The consumer price-indexed (CPI) inflation was 3.65% in February 2017.

Inflation softened last month mainly on account of cheaper food prices and lower cost for fuel. Inflation rate in the consumer food segment was lower at 3.26%, as compared to 4.7% in January.

The January IIP was also boosted by a higher offtake of consumer and capital goods.

Capital goods output in the month under consideration increased sharply by 14.6%, as against a fall of 0.6% in January last year.

Consumer durables recorded a growth rate of 8% as against a decline of 2% in the same month a year ago.

The mining sector, however, registered negligible growth of 0.1%, as compared to 8.6% rise in January last year.

During January, 16 out of 23 industry groups in the manufacturing sector showed positive growth. 

Commenting on the IIP numbers, industry chamber Assocham described these as signs of "an underlying pick-up in the growth trajectory".

"It would be safe to assume that a lot of advantage has accrued because of the low base effect of the previous year when the growth had plunged following the demonetisation, said Assocham Secretary General D.S. Rawat in a statement.

On retail inflation, "the undercurrent remains biased on the upside, making RBI disinclined towards any rate cut", he said.

Deloitte India Lead Economist Anis Chakravarty said: "Overall, the latest IIP data points towards signs of economic recovery as the negative effect of the disruptive shocks of last year appear to be on the wane. However, the momentum of the recovery needs to be sustained through effective implementation of the structural and infra related reforms."

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rajyashree guha

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