Retail inflation falls Feb, industrial output increases in Jan

India's retail inflation fell to 4.44% in February driven by easing prices of food and vegetables. Consumer price inflation (CPI) was at 5.07% in January.

While the price rise in food segment was 3.26% in February, it was 17.57% in vegetables. Both were lower than in January. In January, retail prices of vegetables rose nearly 30%. Food price inflation was at 4.7% in January.

Inflation in pulses and spices witnessed fall in price rise. While pulses declined by 17.35% in January, spices came down by 1.01%, government data showed.

The CPI inflation was in line with the Reserve Bank of India forecast of 5.1% from January to March. The RBI in its monetary policy review last month had estimated retail inflation at 5.1% for January-March 2018.

The country's industrial production, however, rose by 7.5% in January, backed by growth in manufacturing, consumer and capital goods sectors. While the manufacturing sector grew 8.7% in January, compared with 2.5% in the same month last year, capital goods grew 14.6% and consumer non-durables 10.5% in the month under review.

The mining sector, however, was a laggard at 0.1% growth compared to 8.6% a year ago. In all 16 out of 23 industry groups in the manufacturing sector showed growth in January.

Industrial production grew at 4.1% in April-January, compared to 5% in the same period of the previous financial year.

"While 7.5% industrial growth for January looks quite good and the IIP expansion beyond 7% for the last three months gives additional boost to the sentiment, 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 industry body Assocham, adding, "We can see an underlying pick up in the growth trajectory."

"When it comes to consumer inflation, 4.4% in February may be lower than January, the undercurrent remains biased on the upside, making RBI disinclined towards any rate cut, though the industry would like it to happen," it said in a statement.