Industrial production increased with reduction in inflation

Indian Economy: The American economy, which is called a world power, is troubled by inflation. On the other hand, the situation of industrial production in China is also not looking very good. Many countries are facing the brunt of recession. In such a situation, the Indian economy is progressing at a fast pace. Evidence of this can be seen in the figures released by the government. The retail inflation and industrial production figures for the country’s economy were encouraging. Retail inflation fell to a five-month low in March due to softening food prices, while the country’s industrial output reached a four-month high in February. According to official data, inflation based on consumer price index declined to 4.85 percent in the month of March, which is the lowest level in five months. Retail inflation in October 2023 stood at 4.87 percent. At the same time, it was 5.09 percent in February and 5.66 percent in March 2023. The country’s industrial production activities increased by 5.7 percent on an annual basis in February, which is the highest in four months. It increased by 11.9 percent in October, 2023, while it increased by six percent in February, 2023.

Reduction in prices of food products

According to the data of the National Statistical Office (NSO), the decline in the prices of food products played an important role in the decline in retail inflation in the month of March. Food inflation rate was 8.52 percent whereas in February it was 8.66 percent. The inflation rate of other food items including eggs, spices and pulses has declined compared to February. However, prices of fruits and vegetables increased in March compared to a month earlier. At the same time, retail inflation has also decreased in the fuel and light segment. The government has entrusted the Reserve Bank with the responsibility of keeping retail inflation limited to four percent (plus or minus two percent). The Monetary Policy Committee of the Reserve Bank mainly takes into account the retail inflation data while deciding on the policy repo rate.

What will be the pace of inflation this year?

Expressing hope of normal monsoon this year, the central bank has estimated retail inflation to be 4.5 percent for the current financial year. RBI has estimated retail inflation to be 4.9 percent in the April-June quarter and 3.8 percent in the September quarter. According to NSO data, in the month of March, inflation in rural areas was higher than the national average at 5.45 percent, while in urban areas it was less than 4.14 percent. The highest inflation was recorded in Odisha at 7.05 percent while it was the lowest in Delhi at 2.29 percent. Aditi Nair, chief economist of rating agency ICRA, said that due to extreme heat, a rise in the prices of perishable food products can be seen. This will increase the importance of a favorable monsoon in keeping food inflation under control and maintaining inflation expectations.

Also Read: Keep money ready, Vodafone Idea is coming with great FPO, know price band and details

What do the statistics say?

Sanjeev Goenka, president of industry body PHD Chamber of Commerce and Industry, said that softening of retail inflation in rural and urban areas is helping in bringing inflation on a smooth path. NSO data also indicated improvement in industrial activities in the country. The country’s Index of Industrial Production (IIP) grew at the rate of 5.7 percent in February 2024, whereas it had increased by six percent in the same period a year ago. The previous high level of IIP was 11.9 percent in October 2023. After this it slowed down to 2.5 percent in November, 4.2 percent in December and 4.1 percent in January. According to the data, mining production increased by eight percent in February whereas it had increased by 4.8 percent in the same month a year ago. Manufacturing sector output increased by five percent, which had increased by 5.9 percent in the same month a year ago.

Consumer durable production increased by 12.3%

Electricity production increased by 7.5 percent in February this year, which had increased by 8.2 percent in the same month a year ago. The growth rate of capital goods fell to 1.2 percent in February 2024, whereas it was 11 percent a year ago. During the period under review, production of consumer durables increased by 12.3 percent. There was a decline of 4.1 percent in February 2023. The production of non-durable consumer goods declined by 3.8 percent in the month under review, whereas it had increased by 12.5 percent a year ago in February 2023. According to the data, infrastructure/construction goods registered a growth of 8.5 percent in February 2024, compared to nine percent growth in the same month a year ago. There was a growth of 5.9 percent in the production of primary commodities in February this year, which was seven percent a year ago. In the month under review, the intermediate goods segment grew by 9.5 percent, which was more than one percent recorded in the same period a year ago.