New Delhi, Lower food prices eased India’s January 2019 retail inflation to a 19-month low of 2.05 per cent in January 2019, whereas the country’s industrial output in December 2018 was the slowest in the last 17-months at 2.4 per cent, official data showed on Tuesday.
In January 2019 retail inflation slipped to 2.05 per cent from 5.07 per cent in a year-ago period, whereas the country’s industrial output in December 2018 slowed to 2.4 per cent compared with a rise of 7.3 per cent during the corresponding month of last year.
On sequential basis, the Consumer Price Index (CPI) in January 2019 (2.05 per cent) was lower than December 2018’s retail inflation rate of 2.11 per cent.
The CPI data released by Central Statistics Office (CSO) showed that Consumer Food Price Index (CFPI) deflated to (-) 2.17 per cent in January 2019, from 4.70 per cent in the corresponding month of 2018.
Product-wise, prices of milk-based products, meat and fish rose during the month under review on a YoY basis.
In contrast, deflation in the cost of eggs, vegetables and pulses kept the food prices subdued.
Accordingly, the prices of milk-based products rose marginally by 0.78 per cent while cereals became dearer by 0.88 per cent and meat and fish prices recorded a rise of 5.06 per cent.
On a sub-category basis, vegetable prices reduced on YoY basis in January by (-) 13.32 per cent.
The category of “pulses and products” became cheaper by (-) 5.50 per cent and that of “sugar and confectionery” by (-) 8.16 per cent.
The sub-category of food and beverages during the month under consideration recorded a fall of (-) 1.29 per cent over the same period last year.
Among non-food categories, the “fuel and light” segment’s inflation rate accelerated to 2.20 per cent in January.
On Tuesday, CSO also released the Index of Industrial Production (IIP) data for the month of December 2018. The macro-data denoted that lower manufacturing sector production decelerated India’s overall factory production.
The IIP in December 2018 rose only 2.4 per cent from a rise of 7.3 per cent reported for the corresponding month of 2017.
However, on a month-on-month basis, IIP increased during the month under review from November 2018, when it rose marginally by 0.32 per cent.
“The cumulative growth for the period April-December 2018 over the corresponding period of the previous year stands at 4.6 per cent,” the Central Statistics Office (CSO) said in a statement on Tuesday.
As per the data, the output rate of the manufacturing sector slowed to 2.7 per cent in from a year-on-year rise of 8.7 per cent.
On a YoY basis, mining production edged-lower by (-) 1 per cent and the sub-index of electricity generation was stagnant at 4.4 per cent.
Additionally, among the six use-based classification groups, the output of primary goods which has the highest weightage of 34.04 declined by (-) 1.2 per cent. The output of intermediate goods, which has the second highest weightage, fell by (-) 1.5 per cent.
On the other hand, output of consumer non-durables rose by 5.3 per cent and that of consumer durables by 2.9 per cent.
In addition, output of infrastructure or construction good increased by 10.1 per cent and that of capital goods by 5.9 per cent.
According to India Ratings & Research Director for Public Finance and Principal Economist Sunil Kumar Sinha: “The impetus for industrial growth at the broad based level came from manufacturing and electricity and at use based classification came from infrastructure, capital and consumer non-durables.”
“On the inflation front once again the key component that pushed retail inflation down in January 2018 was food items especially fruits, vegetables and pulses. Headline retail inflation also benefited from lower inflation in fuel and clothing….”
Yes Bank’s Chief Economist Shubhada Rao said that at 2.05 per cent, CPI for January is at 19 month-low.
“Extended winter remains supportive of decelerating food prices.The fuel component too has surprised on the downside,” Rao said.
“This along with core inflation at 5.36 per cent presents a scenario of CPI YoY between 2-3 per cent over next 5 months.This raises the probability of rate cut(s) in April and beyond too.”
