STOCK MARKET BSE NSE

Factory output back in negative territory, retail inflation soars

Dashing hopes of a sustained economic recovery, industrial production growth slipped back to the negative zone by contracting 1.6% in January.

Published: 13th March 2021 09:38 AM  |   Last Updated: 13th March 2021 09:38 AM   |  A+A-

Retail inflation, shopping

For representational purpose. (File Photo)

By Express News Service

NEW DELHI:  Dashing hopes of a sustained economic recovery, industrial production growth slipped back to the negative zone by contracting 1.6% in January. And, retail inflation in February shot up to 5.03% driven by food prices and crude oil. The contraction in Index of Industrial Production (IIP), which measures factory output, comes after a 1.56% growth in December 2020.

According to data released by the Ministry of Statistics and Programme Implementation on Friday, the manufacturing sector output contracted 2% in January, while the mining output declined 3.7%. Meanwhile, power generation grew 5.5% in January. The worst performance was witnessed by the capital goods sector, which recorded a contraction of 9.6% during the month under review, followed by a decline of 6.8% in the consumer non-durable section and 0.2% in the consumer durables segment.

“We remain circumspect regarding the intensity of the rebound in household consumption immediately after the vaccine rollout widens, as some categories of households may choose to rebuild the savings that they had drained during the lockdown and post-lockdown period,” said Aditi Nayar, Principal Economist, Icra. Meanwhile, food inflation rose steeply to 3.87% in February, compared with 1.89% in the previous month. Inflation in the ‘fuel and light’ category remained elevated at 3.53% during the month.

While retail inflation at 5.03% is still below RBI’s upper tolerance level of 6%, experts feel it could make the central bank sit up and take notice. “As we had suspected, perhaps the low point for inflation is behind us for some months to come. From a monetary policy perspective, the rising inflationary risks (fuel prices, demand pressures etc), although still nascent, could trigger some caution from the RBI,” said Sakshi Gupta, senior economist at HDFC Bank.



Comments

Disclaimer : We respect your thoughts and views! But we need to be judicious while moderating your comments. All the comments will be moderated by the newindianexpress.com editorial. Abstain from posting comments that are obscene, defamatory or inflammatory, and do not indulge in personal attacks. Try to avoid outside hyperlinks inside the comment. Help us delete comments that do not follow these guidelines.

The views expressed in comments published on newindianexpress.com are those of the comment writers alone. They do not represent the views or opinions of newindianexpress.com or its staff, nor do they represent the views or opinions of The New Indian Express Group, or any entity of, or affiliated with, The New Indian Express Group. newindianexpress.com reserves the right to take any or all comments down at any time.

flipboard facebook twitter whatsapp