New Delhi: In a bad set of economic data, industrial output growth plunged to near zero at 0.1 per cent in March and retail inflation (based on consumer price inflation) accelerated to 5.39 per cent in April.
This is the first pickup in retail inflation since January and could put brakes on any further cut in interest rates by RBI. Inflation was at 4.83 per cent in March. Inflation in April was driven mainly by higher food costs as heat wave led to an incre-ase in prices of staple vegetables. Overall retail food inflation came in at 6.32 per cent, compared with 5.21 percent in March.
“The recent trend of correction in prices of pulses and vegetables was arrested in April 2016, with the latter reflecting a seasonal uptick in the summer months. Moreover, the prices of sugar and fruits hardened further, adding to the spike in food prices on a month-on-month and year-on-year basis,” said Aditi Nayar, Senior Economist at rating agency ICRA.
She said the drought like conditions are unlikely to allow a respite in food inflation until the monsoon covers a significant portion of the country. Meanwhile, industrial production grew 0.1 per cent in March against 2 per cent in February.
The manufacturing sector declined by 1.2 per cent in March against a growth of 2.7 per cent in same month a year ago. It has not done well in 2015-16 as it grew by two per cent compared to 2.3 per cent in previous year.
“It is evident from the data now that the weak consumer and investment demand has started impacting the manufacturing more than exports. The growth in manufacturing may take more time to pick up,” said Ficci.
