IIP at two-month high in January; February retail inflation eases

Why in news

Aided by lower rate of food and fuel inflation, retail inflation for February slipped to a four-month low of 4.44 per cent from 5.07 per cent a month ago. Industrial output growth for January also recorded a bump up, rising to a two-month high of 7.5 per cent after moderating in the previous month to 7.1 per cent.


  • At 4.44 per cent, the inflation rate based on Consumer Price Index (Combined) for February is sharply lower than the 5.1 per cent inflation rate estimated by the Reserve Bank of India (RBI) for the January-March quarter.
  • Food inflation, as measured by the Consumer Food Price Index, moderated to 3.26 per cent in February from 4.70 per cent in the previous month, data released by the Central Statistics Office (CSO) showed.
  • Inflation rate for ‘food and beverages’ segment moderated to 3.38 per cent in February from 4.58 per cent in the previous month, while the ‘fuel and light’ inflation rate moderated to 6.80 per cent from 7.73 per cent in January, CSO data showed. Inflation rate for vegetables was 17.57 per cent in February down from 26.97 per cent in January, while that for fruits was 4.80 per cent as against 6.24 per cent a month ago. Inflation rate for ‘pan, tobacco and intoxicants’ eased to 7.34 per cent in February, while housing inflation was recorded at 8.28 per cent in February.
  • Economists said that the seasonal trend of rising food prices may curtail the slide in food inflation going ahead that is likely to result in status quo by the RBI in its next policy meeting. “While the prices of vegetables such as onions and tomatoes are continuing to correct, many other food items have recorded a sequential increase in prices so far in March 2018. The seasonal trend of rising food prices as the summer approaches, may prevent a further dip in food inflation in the ongoing month. The eventual rabi harvest, distribution of the 2018 monsoon and the operationalisation of the proposals made in the Union Budget for FY2019 including the launch of Operation Greens and the augmentation of minimum support prices, would impact the trajectory of food inflation going forward…the sharp dip in retail inflation in February 2018 has reinforced our expectation that the MPC would keep the repo rate unchanged in the upcoming policy review in April 2018,” Aditi Nayar, Principal Economist, ICRA said.
  • Higher growth and a low base effect in capital goods and consumer durables supported the rise in industrial growth for January. Cumulatively, for April-January, industrial output growth continued to remain lower at 4.1 per cent as against 5 per cent in the same period a year ago.
  • Manufacturing sector grew by 8.7 per cent during January compared with 2.5 per cent last year. Capital goods, an indicator of investment activity, showed a sharp increase in output by 14.6 per cent in January 2018 as against a decline of 0.6 per cent a year ago. Consumer non-durable goods, which are mainly fast moving consumer goods, also recorded an increase of 10.5 per cent as against a growth of 9.6 per cent last year. Consumer durable goods recorded a growth rate of 8 per cent in January 2018 against a contraction of 2 per cent a year ago, the data showed. Capital goods output grew by 14.6 per cent in January as against a contraction of 0.6 per cent in the same period last year.
  • The mining sector recorded a sharp slowdown with 0.1 per cent growth compared to 8.6 per cent a year ago, while infrastructure/construction goods output grew 6.8 per cent in February from 2.6 per cent last year.

Index of industrial production:

  • The Index of Industrial Production (IIP) is an index for India which details out the growth of various sectors in an economy such as mineral mining, electricity and manufacturing.
  • The all India IIP is a composite indicator that measures the short-term changes in the volume of production of a basket of industrial products during a given period with respect to that in a chosen base period.
  • It is compiled and published monthly by the Central Statistical Office (CSO) six weeks after the reference month ends.
  • The level of the Index of Industrial Production (IIP) is an abstract number, the magnitude of which represents the status of production in the industrial sector for a given period of time as compared to a reference period of time.
  • The base year was at one time fixed at 1993–94 so that year was assigned an index level of 100.
  • The current base year is 2011-2012.
  • The Eight Core Industries comprise nearly 40.27% of the weight of items included in the Index of Industrial Production (IIP). These are Electricity, steel, refinery products, crude oil, coal, cement, natural gas and fertilizers.

Q.1 Consider the followings with respect to The Index of Industrial Production (IIP)

  1. IIP is compiled and published by National Sample Survey Organization (NSSCO)
  2. It is published every month

Choose the correct answer from the above

  1. 1 only
  2. 2 only
  3. Both 1 and 2
  4. Neither 1 nor 2

Answer: b.) 2 only


Print Friendly, PDF & Email
We will be happy to hear your thoughts

      Leave a reply

      Current Affairs ONLY
      Register New Account
      Reset Password