CPI inflation surges to 5.03% in February; IIP recedes by 1.6% in January

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The Consumer Price Index (CPI) or retail inflation rate for the month of February 2021 surged to 5.03 percent, the Ministry of Statistics and Programme Implementation (MoSPI) said on March 12.

The CPI inflation, in the urban area, was recorded as 5.96 percent in February. In rural area, the general inflation rate was 4.19 percent during the month. The combined inflation rate was found to be 5.03 percent, the National Statistical Office (NSO) said.

The combined food inflation rate, at 3.87 percent, was lower than the combined general inflation rate. However, in urban areas, the food inflation climbed to 5.63 percent, nearly double of 2.89 percent recorded in rural areas.

"There’s has been a significant rebound in February inflation figure to 5.03 percent from 4.06 percent in January, mostly on the back of rise in food inflation and fuel. The rising global crude prices will continue to add inflationary risks going ahead and CPI will remain elevated," said Rahul Gupta, Head of Research- Currency, Emkay Global Financial Services.

"Currently CPI is within RBI’s target range but at the April meeting, the central bank will have to tackle with increasing inflation and rising bond yields, as cascading impact may slow India’s growth," he added.

While the retail inflation continues to march in the positive trajectory, the Index of Industrial Production (IIP) contracted by 1.6 percent in the month of January, as per the data released by MoSPI.

"The Quick Estimates of Index of Industrial Production (IIP)with base 2011-12 stands at 135.2. The Indices of Industrial Production for the Mining, Manufacturing and Electricity sectors for the month of January 2021 stand at 119.7, 135.1 and 164.2 respectively," an official release by the MoSPI said.

"The indices stand at 133.7 for Primary Goods, 92.6 for Capital Goods, 147.6 for Intermediate Goods and 147.1 for Infrastructure/ Construction Goods for the month of January 2021. Further, the indices for Consumer durables and Consumer non-durables stand at 123.7 and 147.5 respectively for the month of January 2021," it added.

Contrary to the contraction seen in January, the IIP had grown in the preceding two months. The index rose by 0.4 percent in November, followed by a 1 percent rise in December 2020.