Retail inflation eases to 12-month low

New Delhi: With the decline of food prices and kitchen items, India’s headline retail inflation eased to a 12-month low of 4.75 per cent in May on an annual basis from 4.83 per cent in April, while the industrial output slowed to a three-month low of 5 per cent in April as against 5.4 per cent in March this year, mainly due to poor show by the manufacturing sector, the two government data showed on Wednesday.

As per data released by the National Statistical Office (NSO), rural and urban inflation rates are 5.28 per cent and 4.15 per cent respectively. “Inflation in the food basket was 8.69 per cent in May, marginally down from 8.70 per cent in April,” the NSO data showed.

The consumer price index or CPI inflation in April was at 4.83 per cent. The headline rate for last month is the lowest after May 2023 when it came in at 4.31 per cent and has now been under the 5 per cent mark for three consecutive months starting March 2024.

With this number, the retail inflation has remained within the Reserve Bank of India’s (RBI’s) target range of 2-6 per cent since September 2023. However, the government has tasked the central bank to ensure the consumer price index or CPI inflation remains at the target range.

Earlier this month, the RBI had also projected the CPI inflation for 2024-25 at 4.5 per cent, with Q1 at 4.9 per cent, Q2 at 3.8 per cent, Q3 at 4.6 per cent, and Q4 at 4.5 per cent. “Notably, the spices category has seen a considerable decline in year-on-year inflation compared to April 2024. Among the groups, inflation for ‘clothing & footwear,’ ‘housing,’ and ‘miscellaneous’ has also decreased since last month,” the data further showed.

Meanwhile, India’s industrial production growth slipped to a 3-month low of 5 per cent in April 2024, mainly due to poor show by the manufacturing sector, though mining and power segments performed well. Factory output growth, measured in terms of the Index of Industrial Production or IIP, was 5.4 per cent in March and 5.6 per cent in February 2024, according to data released by ministry of statistics & programme implementation.

The previous low of IIP was recorded at 4.2 per cent in January 2024. For the fiscal 2023-24, the IIP growth was 5.9 per cent against 5.2 per cent in the preceding financial year. India's index of industrial production grew by 4.6 per cent in April 2023.

As per the latest data, the mining output growth accelerated to 6.7 per cent in April against a 5.1 per cent expansion in the year-ago month. “The manufacturing sector's growth decelerated to 3.9 per cent in April compared to 5.5 per cent a year ago. Similarly, power generation increased by 10.2 per cent in April against a contraction of 1.1 per cent in the same month of the last year,” it showed.

As per use-base classification, the data showed that the capital goods segment growth fell to 3.1 per cent in April 2024 from 4.4 per cent in the year-ago period. “In April this year, consumer durables output expanded 9.8 per cent. It had contracted by 2.3 per cent in April 2023,” it showed.

“Consumer non-durable goods production contracted by 2.4 per cent during the reporting month as against a growth of 11.4 per cent in April 2023, while infrastructure/construction goods reported a growth of 8 per cent in April 2024 against a 13.4 percent expansion in the year-ago period,” it showed.