Retail inflation holds steady, while IIP growth slows

India’s retail inflation in February was steady and little changed sequentially at 5.09%, data released by the National Statistical Office (NSO) showed.

Food and beverage inflation stayed on the higher side at 7.8%, higher than 7.6% a month ago.

Analysts said the cut in domestic LPG cylinder prices this month, and a softening of food inflation, may bring down inflation in March, though the former may stay above the 7% mark.

The inflation figures come before the Reserve Bank of India’s Monetary Policy Committee (MPC) meets next month (3-5 April).

At its last meeting on 8 February, the rate-setting committee had left the policy repo rate unchanged at 6.5% for a sixth consecutive time.

The RBI has projected CPI inflation to reach 5% in the current quarter, and ease to 4% in the July-September period before climbing again to 4.7% in the first quarter of 2025.

Meanwhile the year-on-year expansion in the Index of Industrial Production (IIP) declined to 3.8% in January from 4.2% in the previous month, led by a dip in the manufacturing sector, data showed.

The manufacturing sector put up a weak show during the month, sequentially, though power generation and mining output accelerated.

Manufacturing growth declined to 3.2% in January from 4.5% in the previous month. In contrast, electricity generation grew by 5.6% against a 1.2% expansion in the previous month.

Mining output growth rose to 5.9% from 5.2% the previous month, aided by deficit rainfall.

Rating firm ICRA Ltd said it sees the y-o-y IIP growth to stick to the 3-4% trajectory in February, too, on the back of an unfavorable base effect. IIP growth in February last year was 6%.