New Delhi : In a double whammy, industrial output growth plunged to 0.1 per cent in March while retail inflation soared to 5.39 per cent in April. The negative news on two fronts may mar the prospects of any immediate rate cut by the RBI.
The factory output growth decelerated mainly due to poor performance of manufacturing and mining sectors coupled with contraction in capital goods production, while higher food prices pushed the inflation higher, reversing the recent downward trend. The retail inflation in March stood at 4.83 per cent, the lowest in six months. In April 2015, the rate of price rise was at 4.87 per cent.
Commenting on the surge in retail inflation, Economic Affairs Secretary Shaktikanta Das said, “It is subject to further analysis, perhaps some CPI inflation base effect also accounts for this. In any case overall core inflation is below 5 per cent and the overall number is also less than 5.5 per cent. It’s within the target.”
Food inflation rose to 6.32 per cent in April, as against 5.21 per cent in March, official data showed.
“The macro picture, as reflected by negligible up-tick in industrial growth, thanks to a sharp deceleration in capital goods and other vital segments for March and retail inflation expanding at a much higher pace than expected, looks challenging once again,” Assocham President Sunil Kanoria said in a statement.
He further said, “Widespread drought has definitely affected the food prices sending the CPI upwards. Hoping normal Monsoon will bring in a comfort level. Overall, the big picture looks far more difficult making it imperative for the government to bring in policy reforms and demand push measures.”