Grocery items put on display for sale at a market, in New Delhi. Photo used for representation purpose only.
| Photo Credit: Sushil Kumar Verma
India’s retail inflation slid to 4.7% in April, staying below the Reserve Bank of India’s 6% tolerance threshold for price rise for the second successive month, aided by the base effects from last April when it had hit a eight-year high of 7.8%.
The retail inflation based on Consumer Price Index (CPI) was 5.66% in March 2023 and 7.79% in the year-ago period. Retail inflation in April is the lowest since October 2021 when it was at 4.48%.
According to the National Statistical Office, the inflation in the food basket was 3.84% in April, as against 4.79% in March and 8.31% in the year-ago period.
Retail inflation rose from 5.7% in December 2022 to 6.4% in February 2023 on the back of higher prices of cereals, milk and fruits and slower deflation in vegetable prices.
Reserve Bank of India has projected the CPI inflation at 5.2% for FY2023-24, with 5.1% in Q1, 5.4 per cent in Q2, 5.4% in Q3, and 5.2% in Q4, and risks evenly balanced.
Industrial output skids
Industrial output growth dropped to a five-month low of 1.1% in March 2023 moderating sharply from 5.8% in February, with electricity, consumer durables and non-durables recording a contraction from a year ago, and manufacturing growing just 0.5%
Mining output grew 6.8% in March, while capital goods and infrastructure/goods production rose 8.1% and 5.4%, respectively. Primary goods’ output growth, however, more than halved from 6.9% in February to 3.3% in March. Intermediate goods grew at a tepid 1.1% pace, but this constituted a three-month high after a growth of 0.5% in January and 0.7% in February.
Electricity generation contracted 1.6% in March, marking the first decline in at least a year. The dip in power output follows three months of 10%-plus growth from November 2022 and an 8.2% uptick this February.
For the full year 2022-23, India’s industrial production was up 5.1%, compared to a 11.4% rise in 2021-22. Electricity generation rose 8.9% in the year with mining and manufacturing, rising 5.8% and 4.5%, respectively.
Consumer durables’ output shrank for the fourth month in a row, with the decline widening to a three-month low of 8.4%. Consumer durables production had dropped 11.2% in December, 8.2% in January and 4.07% in February.
Overall consumer durables as well as consumer non-durables’ output grew just 0.5% in 2022-23. The latter saw the first contraction in production in March over a five-month span, dipping 3.1%. Both these segments had registered declines in March 2022 as well, with durables shrinking 3.1% and non-durables dropping 4.4%.
Split by end-use, capital goods grew the fastest in 2022-23 at 12.9%, followed by infrastructure/construction goods (8%) and primary goods (7.4%). Intermediate goods rose 3.7%, compared to 15.4% in 2021-22.
“The Index of Industrial Production or IIP growth of 1.1% in March is a major disappointment as we had expected a better number of 3.5%,” said Madan Sabnavis, chief economist at Bank of Baroda. “The usual year-end phenomenon of production being ramped up in March did not happen this time. The IIP numbers also don’t gel with the Purchasing Managers’ Index (PMI) indicators, so we need to view the PMI readings with caution,” he emphasised.
(With inputs from PTI)