India’s retail inflation rises to 6.95% in March: NSO

New Delhi, April 12: India’s annual retail inflation rose up to a 17-month high in March while factory output contracted in February.

According to the data released by the National Statistical Office (NSO) on Tuesday the retail inflation rate rose to 6.95 per cent in March from a year ago, remaining above the tolerance limit of the Reserve Bank of India (RBI) for the third straight month. The Index of Industrial Production (IIP), on the other hand, grew 1.7 per cent on an annual basis in February but contracted 4.7 per cent month on month, signalling that economic revival is yet to find a strong footing.

The Consumer Price Index (CPI)-based inflation was led by the edible oils (18.79 per cent), vegetables (11.64 per cent), meat and fish (9.63 per cent), footwear and clothing (9.4 per cent), and fuel and light (7.52 per cent) segments.

Core inflation, which excludes the volatile food and fuel items, jumped to a 10-month high of 6.29 per cent in March from 5.96 per cent in the previous month.

Russian invasion of Ukraine has put upward pressure on food and commodity prices, forcing the RBI to reassess its accommodative policy stance. In its latest monetary policy review, the central bank kept key policy rates unchanged but signalled that it would now prioritise keeping inflation in check over incentivising growth. The RBI revised downwards its growth projection for FY23 to 7.2 per cent from 7.8 per cent while raising its inflation forecast for the year to 5.7 per cent from 4.5 per cent, assuming crude oil prices at $100 per barrel.

Out of the six segments by use-based classification of the IIP, four — primary goods, capital goods, intermediate goods, and infrastructure goods — witnessed positive growth in February. However, consumer durables (-8.2 per cent) contracted for the fifth consecutive month while consumer non-durables (-5.5 per cent) shrank after a month’s gap.