Published: Wed, March 14, 2018
Finance | By Loren Pratt

Manufacturing, capital & consumergoods push IIP growth to 7.5 pc

Manufacturing, capital & consumergoods push IIP growth to 7.5 pc

In January, retail prices of vegetables rose almost 30%.

While the consumer price index is a popular barometer of economic health, it is not the primary gauge the Fed uses to determine whether it is meeting its mandate of price stability.

Over the last 12 months, the all items index rose 2.2 percent before seasonal adjustment.

The cumulative Index of Industrial Production (IIP) growth for the April-January period of the current fiscal over the corresponding period of the previous year stood at 4.1 per cent, the CSO said. Food Prices Remain Elevated The less than expected decline in inflation rate in January was due to the upward pressure from the cost of food items, as food inflation rose by 0.87% to a twelve-month average of 19.62%, the highest since 2009.

The dollar index .DXY , which measures the greenback against a basket of currencies, fell 0.2 percent, with the euro EUR= unchanged at $1.2389. The index rose 1.8% for the 12 months ending in February. However, the rate of price increase was higher for transport and communication services at 2.39 per cent (1.97 per cent January).

Leading domestic credit ratings agency Crisil said while there is an improvement in the growth-inflation mix in numbers released yesterday, it is unlikely to result in any rate cut by the central bank in the next six months. The strength of the 30-year reopening in spite of the $1 billion increase in supply suggests firm demand for long-dated bonds, and spurred additional bond buying in the open market.

"Tame core goods prices continue to keep inflation at bay, a reflection of the remaining global economic slack offsetting a tightening USA economy", he said.

Analysts polled by Reuters had predicted February´s rate would ease to 4.8 percent from 5.1 percent in January. Manufacturing alone constitutes 77.63 per cent of the index. A larger harvest from the winter crop is expected by end-March and in April, and this is likely to further cool vegetable price inflation. However, the mining sector saw a flat growth of 0.1 per cent compared to 8.6 per cent a year ago. In February 2017, however, it was 3.65 per cent.

The overall CPI increased 0.2% in February on a seasonally adjusted basis, after rising 0.5% in January and was up 2.2% from a year earlier.

In the women's sector, prices rose in all categories, led by a 4.8% increase in outerwear and a 2.4% hike in suits and separates, while prices for dresses were up 1.9% and tags for the underwear, nightwear, sportswear and accessories group were 1.1% higher.

"Looking ahead, we expect that industrial performance would be on a clear up-slope with both consumption and investment picking up pace during the year", CII Director General Chandrajit Banerjee said.

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