JOIN USBacked by a slower rise in prices food and vegetables, India’s retail inflation (consumer price inflation or CPI) cooled below five per cent in April, but industrial production growth hit a five-month low of 2.1 per cent in March, boosting prospects of interest rate cut by Reserve Bank of India (RBI) in the near future.
CPI cooled to a four-month low of 4.87 per cent in April from 5.25 per cent in March. Retail food inflation fell 5.11 per cent during April from 6.14 per cent in March, a government data showed on Tuesday.
Vegetable price inflation stood at 6.63 per cent against 11.26 per cent in March, while clothing, footwear inflation was at 6.15 per cent versus 6.27 per cent in March.
Factory output, however, grew at a five-month low of 2.1 per cent in March underscoring concerns of a tepid economic recovery in the absence of demand by consumers. Industrial output had grown 4.86 per cent in February.
Manufacturing output, which constitutes over 75 per cent of the industrial production index, grew only 2.2 per cent in March. The production of capital goods, a barometer of demand, grew 7.6 per cent and mining sector grew by 0.9 per cent.
Overall, 13 out of 22 industry groups in the manufacturing sector showed positive growth during the month of March.
Industry body CII said the industry output growth numbers indicated demand-side constraints still needed to be overcome. “Core sector output contracting by 0.1 per cent in March and India’s merchandise exports declining by 21 per cent during the month show that both domestic and external demand continues to be fragile,” CII said in a statement.
“While it is reassuring to see the positive growth in manufacturing for 2014-15, the growth remains tepid. Critical constraints for the sector like high interest rates, infrastructure bottlenecks, low domestic and export demand are areas of concern for the sector and may continue to impact growth in coming months,” Ficci said.