New Delhi: Diminishing hopes of another rate cut by the Reserve Bank, retail inflation rose to 5.37 percent in February, the third consecutive month of uptick, even as industrial output grew by modest 2.6 percent in January.
According to data released by the Central Statistics Office (CSO) Thursday, growth in industrial production was, however, lower than revised figure of 3.23 percent in December 2014. It is higher than 1.1 percent in January last year.
The improvement in factory output, measured in terms of Index of Industrial Production (IIP), was primarily on better performance by the manufacturing sector which accounts of 75 percent of the index.
Inflation remains a worry with the third straight increase in February due to costlier food items, including vegetables and beverages.
Retail inflation measured in terms of Consumer Price Index (CPI) rose to three month high of 5.37 percent in February, up from 5.19 percent in January. It had risen to 5 percent in December last year.
Cheering IIP numbers, the industry asked the RBI not be swayed by slight uptick in inflation and should continue to moderate interest rates to push growth.
CII Director General Chandrajit Banerjee said: "There is marginal uptick in CPI inflation over the previous month.
"But this should not dissuade the RBI from continuing with its rate easing cycle to support growth in the forthcoming monetary policy announcement in April, especially as the performance of consumer durables continues to be muted and inflation is within the comfort zone of the RBI."
The Reserve Bank of India has cut policy rate by 0.50 percent in the last two months to 7.5 percent. The central bank is widely expected to go for another another cut in its monetary policy review meet slated for April 7.
It may be noted that the International Monetary Fund (IMF) in its annual assessment report has suggested that India should keep its monetary policy tight as underlying inflationary pressures and upside risks remain.
On IIP front, manufacturing in January showed a marked improvement at 3.3 percent that comes after several months of sluggishness. In the same month a year ago, manufacturing out grew by 0.3 percent.
For April-January period, the sector saw an output growth of 1.7 percent, compared to a contraction of 0.3 percent in the year-ago period.
According to CSO data, the CPI in February last year was 7.88 percent.
Food inflation during the month under review rose to 6.79 percent from 6.06 percent in January. The rise in inflation in food items was mainly due to costlier vegetables, pulses and beverages.
The rate of price rise in vegetables went up by 13.01 percent; in pulses and products by 10.61 percent, while the same in the food & beverages category rates moved up by 6.76 percent. Inflation in fruits was 8.93 percent.
For rural segment, retail inflation was 5.79 percent in February 2015 and that for urban centres 4.95 percent.
As regards IIP, production of capital goods, a barometer of demand, grew by 12.8 percent in January as against a contraction of 3.9 percent in same month last year.
Fourteen out of the 22 industry groups in the manufacturing sector have shown positive growth during the month of January year-on-year.
Power generation grew by 2.7 percent in January compared to 6.5 percent in the same month last year.
During April-January period, electricity production grew by 9.3 percent compared to a growth of 5.7 percent in the corresponding period last fiscal.
The mining sector output contracted by 2.8 percent in January, compared to a growth of 2.7 percent in the same month last year. During April-January period, output has grown by 1.3 percent compared to a contraction of 1.1 percent year-on-year.
The overall consumer goods output has declined by 1.9 percent in January compared to a dip of 0.5 percent in the same month last year. During April-January, the output of these goods contracted by 4.7 percent compared to a dip of 2.7 percent in the corresponding period last fiscal.
Similarly, consumer durables output also contracted by 5.3 percent. In April-January, the output declined by 14.2 percent compared to a dip of 12.5 percent in the same period last fiscal.
The consumer non-durable production also contracted by 0.1 percent in January compared to a growth of 4.5 percent in same month last year. During April-January the output grew by 1.9 percent compared to a growth of 5.7 percent.
However the basic goods output grew by 4.5 percent in January compared a growth of 2.8 percent in same month last year.
