Inflation cools, factory output stumbles in March

Latest macro economic numbers have given a mixed response. While retail inflation cooled at 4.28% in March on the back of lower vegetable and food prices and removal of supply glitches by the government, industrial production growth slowed at 7.1% in February compared to a high of 7.5% in the previous month.

The index of consumer price inflation (CPI) slowed for the third consecutive month, the government data showed.

While food price inflation stood at 2.8% compared with 3.26% in February, prices of pulses fell 13.4% in March year-on-year. Vegetables prices grew 11.7% in March.

Fuel and light inflation too came down at 5.7% in March compared to 6.8%in the previous month. Housing inflation was slightly up at 8.3%. Clothing and footwear inflation rose to 4.9% compared with 5% in February.

Anis Chakravarty, lead economist and partner, Deloitte India said the downward growth movement of food inflation has had a larger-than-expected role to play in easing inflation prints. and improved monsoon prospects are likely to keep food inflation concerns at bay.

Core inflation has continued to remain on the upside on the back of likely pass-through of input costs.

He, however, said that despite the positive news on the food inflation front, inflationary pressures remained tilted to the upside and were likely to hover around the 5% mark in the current financial year.

Last week, the RBI brought down its January-March FY18 inflation projection to 4.5% from at 5.1%. It also slashed CPI inflation for the first half of 2018-19 to 4.7-5.1% and down at 4.4% for the second half.

The IIP data showed though the growth came down to 7.1% in February compared with 7.5% in January, manufacturing output witnessed a robust growth.

Richa Gupta, senior economist and senior director at Deloitte India said the factory output data still remained significantly healthy and production had largely marked a broad-based improvement for the fourth consecutive month.