Double whammy: IIP flat, retail inflation moves up

India's macro economic woes, at least on the growth and inflation fronts, refuse to die. While industrial output growth was almost flat in March after rising two per cent in February, retail inflation rose to 5.39 per cent in April, against 4.83 per cent in March. This could make it difficult for the Reserve Bank to choose between taming inflation and raising struggling industrial growth. Growth in the index of industrial production fell to 0.1 per cent in March from February according to official data released on Thursday.

Consumer Price Index-based inflation (CPI) for the month of April was a higher than expected 5.39 per cent, on the back of a large jump in food prices, snapping a three-month downtrend.

The figure for March was a sixmonth low of 4.83 per cent. In April last year, it had been 4.87 per cent.

The accelerated pace could put a pause on more rate cuts by the Reserve Bank. Food inflation rose to 6.32 per cent in April against 5.21 per cent in March and 5.11 per cent in April last year, show data released on Thursday by the ministry of statistics and programme implementation (MOSPI).

Analysts polled by Reuters had expected April retail inflation to be five per cent.

Those surveyed by Bloomberg had expected 5.05 per cent. The rate of price rise in vegetables quickened to 4.82 per cent; fruits turned costlier by 1.66 per cent. Generally, prices of fruits, vegetables and prepared foods rise during summer, due to less availability.

Inflation in 'cereals and products' remained flat at 2.43 per cent, but rose for the ‘meat and fish’ category at 8.07 per cent and also for 'oil and fats' at 5.04 per cent. That in eggs and 'pulses & products' was slower than a year before at 6.64 per cent and 34.13 per cent, respectively. Likewise, cost of fuel and light was also less from a year before, as inflation softened to 3.03 per cent.