5/13/2016
Retail inflation accelerates to 5.39 per cent in April, IIP growth down to 0.1% in March ­ The Economic Times
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Retail inflation accelerates to 5.39 per cent in April, IIP
growth down to 0.1% in March
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By ET Bureau | 13 May, 2016, 02.19AM IST
NEW DELHI: In a double setback for the Indian economy, retail inflation spiked in April while
industrial growth stagnated, denting chances of a rate cut by the Reserve Bank of India in
the June review. The two sets of numbers released by the Central Statistics Office on
Thursday showed Index of Industrial Production rose only 0.1% in March, while higher food
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and fuel prices drove retail inflation to 5.39% in April compared with 4.83% in March. "The data sets are not pleasant. IIP is rather disappointing on account of capital goods and
non­durable goods. This shows that growth is extremely vulnerable," said Upasna
Bharadwaj, an economist at Kotak Mahindra Bank. "There is a dim chance for the RBI to act
in June because of the uncertainty in monsoons. There is room to act but RBI will stay put in
June." Inflation rises to 5.39% in April, March IIP up by only 0.1%
Industrial production growth was 2.4% in all of 2015­16 compared with 2.8% in the previous
financial year. A better­than­expected growth in core sector output had raised hopes of a decent growth in IIP. The core sector, which has
a 38% weight in IIP, rose 6.4% in March, at the fastest pace in 16 months. The contraction in the IIP in December was revised to 0.9%
from 1.2%. Retail inflation picked up in April for the first time since January. RBI chief Raghuram Rajan aims to cap retail inflation at 5% by March
2017. The pace of price gains in April was driven by higher food costs. An early summer heat wave led to a 34% increase in prices of
pulses, which fuelled the 6.21% rise in food prices. http://economictimes.indiatimes.com/news/economy/indicators/retail­inflation­accelerates­to­5­39­per­cent­in­april­iip­growth­down­to­0­1­in­march/articleshow/52240306.cms?prtpage=1
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5/13/2016
Retail inflation accelerates to 5.39 per cent in April, IIP growth down to 0.1% in March ­ The Economic Times
The numbers suggest the RBI may not cut rates at its June 7 policy review. "It is a major
disappointment on both fronts...all indications of a turnaround are shattered. Reservoir levels
are down and there is a drought in Maharashtra. RBI will be cautious of the monsoons, its
spread and its effect on crops. It is premature for a rate cut," said CARE Ratings' chief
economist Madan Sabnavis. Soumya Kanti Ghosh, chief economic advisor at State Bank of India, said the RBI will keep
on hold the rates, depending on the monsoon, which typically starts in the first week of June.
Manufacturing and mining contracted 1.2% and 0.1%, respectively, in March, although
electricity generation rose 11.3%. A 15.4% contraction in capital goods sector indicate the
continued weakness of investment demand. Consumer non­durables production fell 4.4%,
while output of durables rose 8.7%, highlighting the rural­urban divide. Inflation raced up to 5.39 per cent in April, while IIP dragged up
0.1 per cent.
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Retail inflation accelerates to 5.39 per cent in April, IIP growth down to 0.1% in March ­ The Economic Times
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http://economictimes.indiatimes.com/news/economy/indicators/retail­inflation­accelerates­to­5­39­per­cent­in­april­iip­growth­down­to­0­1­in­march/articleshow/52240306.cms?prtpage=1
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