India’s retail inflation drops to 5.66% in March

For the first time in three months, India’s retail inflation slid below the 6% mark to 5.66% in March 2023.

For the first time in three months, India’s retail inflation slid below the 6% mark to 5.66% in March 2023, aided by base effects as the same month had recorded almost 7% price rise last year.

The inflation figure in March is within the RBI’s comfort zone as it is below 6%.

Food price inflation, which was 7.7% in March 2022 and 6% in February this year, eased to 4.8% last month, as per data from the National Statistical Office. On a month-on-month basis, however, inflation measured by the Consumer Price Index (CPI) inched up by 0.23% while the Consumer Food Price Index was up 0.3%.

India’s industrial output grew 5.6% this February, marginally higher than the 5.45% in January, with manufacturing output picking up pace to rise 5.3% even as electricity generation grew less than 10% for the first time in four months at 8.7%.

Consumer durables production contracted for the third month in a row, to drop 4% in February. The favourable base from February 2022 when durables’ output fell 10%, didn’t help much, and their production levels were also 0.4% below this January’s output.

On the other hand, consumer non-durables saw a 12.1% surge in output this February compared to a nearly 7% decline in the same month of 2022. However, February marked the second month of a sequential decline in output with production 6% below January levels.

Reserve Bank of India has projected the CPI inflation at 5.2% for FY2023-24, with 5.1% in Q1, 5.4% in Q2, 5.4% in Q3, and 5.2% in Q4, and risks evenly balanced.