Retail inflation cools to 15-month low, IIP rises
After staying above 6 per cent for two consecutive months, retail inflation eased to a 15-month low of 5.66 per cent in March, coming under RBI’s comfort zone.
NEW DELHI: After staying above 6 per cent for two consecutive months, retail inflation eased to a 15-month low of 5.66 per cent in March, coming under RBI’s comfort zone. Retail inflation, as measured by the Consumer Price Index, was 6.44 per cent in February 2023 and 6.95 per cent in the year-ago period. The previous low was also 5.66 per cent in December 2021.
The cooling of inflation was on the back of lower prices of vegetables and other items such as oils and fats, whose index fell 2.6 per cent in March on a monthly basis. There was a drop in the prices of cereals, sugar and confectionery, too.
“The steep drop was aided by a high base effect, which is expected to support at least in the entire first quarter. The base had swelled due to a sharp surge in oil and food prices after the Russia-Ukraine conflict began last February and due to strengthening demand after the third Covid wave subsided,” said Dharmakirti Joshi, chief economist at Crisil.
Meanwhile, the Index of Industrial Production — which measures the performance of eight core sectors — surged 5.6 per cent in February against 5.5 per cent in January, thanks to improvement in manufacturing.
Reading the Fine print
- The dramatic drop in retail inflation in March was aided by a favourable base effect
- Lower inflation can help boost business confidence, which will in turn lead to increased economic activity