Retail inflation slowed to a four-month low in February, while the wholesale price index posted a negative reading for a 16th straight month, prompting industry groups to call on the Reserve Bank of India (RBI) to cut interest rates to spur economic growth.
KEY POINTS
Food inflation in the CPI
- Came in at 5.5 per cent in February compared with 6.7 per cent in January.
Food inflation in the WPI
- Rate of inflation in food articles also decreased to 3.35 per cent in February from 6 per cent in January
Index for Industrial Production (IIP)
- IIP in January showed output contracted 1.53 per cent compared with the 1.18 per cent contraction in December 2015 as the figures signal domestic demand is yet to gain significant traction.
The data
- Marks the first break in the six-month streak of accelerating retail inflation.
The annual rate of inflation, based on monthly WPI,
- Stood at -0.91 per cent (provisional) for the month of February, 2016 (over February, 2015) as compared to (-)0.90 per cent (provisional) for the previous month and (-)2.17 per cent during the corresponding month of the previous year.
The decline in inflation
- Mainly attributed to a significant drop in food prices and is in alignment with market expectations.
Primary article inflation in the WPI
- Slowed down significantly in February to 1.6 per cent compared to 4.6 per cent in January.
IIP numbers released last week
- Reported negative growth for the third consecutive month in January 2016 and highlight that signs of pick up in the manufacturing sector remain elusive.”
The rate of inflation in manufactured products
- Did remain negative, it moved closer to positive territory in February, coming in at -0.6 per cent compared to -1.2 per cent in January.
The rate of inflation in the ‘fuel & power’ segment
- The WPI was -6.4 per cent in February compared to -9.2 per cent in January.
- The CPI came in at 4.6 per cent in February, down from 5.3 per cent in January.
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