Retail inflation eases to 4.28% in March, factory output grew at 7.1% in Feb
Consumer Price Index (CPI) inflation eased from 4.44% in February to 4.28% in March, while factory output grew at 7.1% in February.business Updated: Apr 12, 2018 18:04 IST
Retail inflation decelerated for the fourth consecutive month at 4.28% in March, even as India’s factory output grew at a robust 7.1% in February, leading to expectation that the economy may be on a sustained recovery path.
While softening food inflation, from 3.26% in Febriary to 2.81% in March led to drop in retail inflation rate, 8.7% growth in manufacturing output sustained above 7% growth in IIP for the fourth consecutive month.
The RBI has marginally revised downward its inflation projection for the current fiscal year 2018-19 to 4.7-5.1% in the first half and 4.4% in the second half. RBI has a mandate of achieving the medium-term target for consumer price index (CPI) inflation of 4% within a band of +/- 2 percentage points, while supporting growth.
The Asian Development Bank in its annual outlook released on Wednesday said with global oil prices forecast to increase by 19.7% in 2018 to $65 per barrel, decontrolled prices for fuels are expected to go up in India. “This will spill over into transportation and add some 30 basis points to inflation,” it warned.
However, it said the odds of a policy rate hike by the Reserve Bank of India are low with the central bank indicating tolerance for slightly higher inflation and recognition of the need to nurture recovery. “Consequently, the status quo is likely to hold in 2018-19, albeit with some risk of monetary tightening,” it added.