New Delhi: Retail inflation soared to a 17-month high of 6.95 per cent in March, continuing to remain above the Reserve Bank’s upper tolerance level while the factory output grew just 1.7 per cent in February, according to official data released on Tuesday.
The Consumer Price Index (CPI) based inflation rose mainly on account of rising prices of essential food items like ‘oils and fats’, vegetables and protein rich items such as ‘meat and fish’.
This is the third consecutive month that the inflation remained above the 6 per cent mark. The previous high at 7.61 per cent was recorded in October 2020.
The inflation in the food basket shot up to 7.68 per cent in March 2022 from 5.85 per cent in the preceding month.
Reserve Bank of India’s tolerance limit of retail inflation is 4 per cent with a 2 per cent margin on either side. On a quarterly basis, the retail inflation during January-March works out to be 6.34 per cent.
The Index of Industrial Production (IIP) or the factory output in February expanded by a modest 1.7 per cent on an annual basis on account of improved performance by the mining and power generation sectors.
The growth was 1.5 per cent in January 2022. It had contracted by 3.2 per cent in February 2021.
The growth in the mining sector was 4.5 per cent against a contraction of 4.4 per cent in February 2021.
In February this year, the manufacturing sector expanded 0.8 per cent whereas it had witnessed a contraction of 3.4 per cent in the year-ago period.
However, growth in power generation accelerated to 4.5 per cent against a flat growth of 0.1 per cent in February 2021.
In the April-February period of the last fiscal, the IIP growth stood at 12.5 per cent against a contraction of 11.1 per cent in the corresponding period of 2020-21.
The CPI and IIP data were released by the National Statistical Office (NSO).
As per the CPI data, inflation in ‘oils and fats’ in March soared to 18.79 per cent as the geopolitical crisis due to the Russia-Ukraine war pushed edible oil prices higher. Ukraine is a major exporter of sunflower oil.
In vegetables, inflation quickened to 11.64 per cent in March while in ‘meat and fish’ the rate of price rise stood at 9.63 compared to February 2022.
However, inflation in the ‘fuel and light’ category was lower at 7.52 per cent in March from 8.73 per cent in the preceding month.
Last week, RBI raised the retail inflation projection for the current fiscal to 5.7 per cent from an earlier forecast of 4.5 per cent.
However, it expects moderation in prices of cereals and pulses on a likely record harvest of the winter season (rabi) crop.
The central bank had also said that given the excessive volatility in global crude oil prices since late February and the extreme uncertainty over the evolving geopolitical tensions, any projection of growth and inflation is fraught with risk, and is largely contingent upon future oil and commodity price developments.
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