CPI Inflation at 19-month low in Jan; IIP growth recovers In Dec
India’s CPI-based inflation for the month of January 2019 eased to a 19-month low at 2.05 per cent while industrial production in December 2018 bounced back to 2.4 per cent.
India’s CPI-based inflation for the month of January 2019 eased to a 19-month low at 2.05 per cent while industrial production in December 2018 bounced back to 2.4 per cent after sliding to a 17-month low in November. “The quick estimates of Index of Industrial Production (IIP) with base 2011-12 for the month of December 2018 stands at 133.7, which is 2.4 per cent higher as compared to the level in the month of December 2017. The cumulative growth for the period April-December 2018 over the corresponding period of the previous year stands at 4.6 per cent,” CSO said in a statement.
The marginal drop in India’s retail inflation in January 2019 as compared to December 2018 is largely due to the continuous decline in food prices, including vegetables and eggs. The retail inflation for December 2018 has been revised downward to 2.11 per cent from the earlier estimate of 2.19 per cent. The CPI-based inflation was 5.07 per cent in January 2018. The rural inflation shed to 1.29 per cent in January 2018 from 1.50 per cent in December 2018 while urban inflation remained unchanged at 2.91 per cent for January 2019, according to the data released by the government. In December 2018, India’s retail inflation slipped to an 18-month low of 2.11 per cent in December 2018 and hit a record low of 1.54 per cent (new base 2011-2012=100) in June 2017.
India’s Industrial production growth remained dull in December 2018 on the back of a contraction in the mining segment and lower growth by the index heavyweight manufacturing sector. The manufacturing sector registered a growth of 2.7 per cent in December 2018 as compared to an expansion of 8.7 per cent in December 2017. Notably, the manufacturing sector accounts for 77.63 per cent of the index. The industrial growth for November 2018 has also been revised downwards to 0.3 per cent from the provisional estimate of 0.5 per cent released in January 2019.
During the April-December period of the financial year 2018-2019, India’s industrial output recorded a growth of 4.6 per cent vs. growth of 3.7 per cent in the similar period of the previous fiscal.
Earlier last week, the Reserve Bank of India (RBI) in its sixth and last Monetary Policy Committee (MPC) meeting for the fiscal year 2018-2019 lowered the repo rates by 25 basis points to 6.25 per cent. The repo rates were slashed for the first time under the new RBI governor Shaktikanta Das and in last 17 month. Further, the six-member policy committee chaired by RBI governor Shaktikanta Das changed the policy stance to ‘neutral’ from ‘calibrated tightening’.
“Headline inflation is projected to remain soft in the near term reflecting the current low level of inflation and the benign food inflation outlook. Beyond the near term, some uncertainties warrant careful monitoring. The MPC reiterates its commitment to achieving the medium-term target for headline inflation of 4 per cent on a durable basis,” RBI stated.