Retail inflation fallsDate: 13 March 2020 Tags: Reports & Indices
Retail inflation based on the Consumer Price Index slowed to 6.58% in February, while the industrial production growth as measured in the Index of Industrial Production (IIP) quickened to 2% in January, according to official data.
Retail inflation means the increase in prices of certain products or commodities compared to a base price. In India, retail inflation is linked to Consumer Price Index(CPI) which is managed by Ministry of Statistics and Programme implementation.
Retail inflation, which was 7.59% in January 2020 and 2.57% in February 2019, slowed mainly due to easing food prices. Inflation in the food basket was 10.81% February 2020, lower from 13.63% in the previous month.
The moderation in inflation has expectedly been led largely by food inflation while core inflation remains muted amid tepid demand.
The government has mandated the central bank to keep inflation at 4% with a margin of two percentage points on on either side.
With domestic and global growth expected to face downside risks from the spread of COVID-19 and deflationary forces emerging, there is room for up to 50 bps of rate cut by the MPC.
The IIP had accelerated 1.6% in January 2019. For January 2020, official data showed that the mining sector output grew 4.4% against a rise of 3.8%, manufacturing output rose 1.5% compared with 1.3% in the year-ago month, and electricity generation rose 3.1% versus 0.9% in January 2019.