India’s CPI inflation eases to 4.06pc

14 February, 2021 12:00 AM printer

NEW DELHI: Economic data released on Friday showed that Indian economy is finally emerging from the long shadow of coronavirus pandemic with inflation further cooling and industry output showing a rebound.

The Index of Industrial Production (IIP) grew 1 per cent for December 2020, showed the data released by the Ministry of Statistics and Programme Implementation (MoSPI) on Friday, report agencies.

The factory output in the country had contracted 1.9 per cent in November and grew 0.4 per cent in December 2019. According to the Index of Industrial Production (IIP) data, the manufacturing sector output grew by 1.6 per cent in December 2020.

Mining output declined by 4.8 per cent, while power generation grew 5.1 per cent in December 2020. Industrial production has been hit due to the Covid-19 pandemic since March last year when IIP contracted by 18.7 per cent in the month.

Consumer Price Index inflation eased to 4.06 per cent in January 2021, mainly on account of a decline in vegetable prices, according to government data released on Friday.

The inflation based on CPI was 4.59 per cent in December 2020 and 7.6 per cent in January 2020. Core inflation remained flat at 5.7 per cent. The rate of price rise in the food basket was 1.89 per cent in January, significantly down from 3.41 per cent in December, revealed the data released by the National Statistical Office (NSO).

The Reserve Bank, which mainly factors in the retail inflation while arriving at its monetary policy, has been asked to keep CPI inflation at 4 per cent (+,- 2 per cent).

“Inflation cooled off in January with a moderation in vegetable prices, animal proteins and a favourable base effect. Core inflation, however, continues to remain sticky at 5.7 per cent with a rise in categories such as health, recreation and amusement. Going forward, a number of inflation risks remain including rising commodity prices, higher global food prices and expansionary fiscal policy leading to a pick-up in demand. Therefore, the January print could be the low point for inflation for some months to come and we expect inflation to average between 5 per cent and 5.5 per cent in H1FY22,” said Sakshi Gupta, senior economist, HDFC Bank.