The consumer food price index (CFPI) stood at 3.26% during the month, lower compared to 4.70% of January 2018, but way higher from 2.01% of year ago same month.
The cumulative Index of Industrial Production (IIP) growth for the April-January period of the current fiscal over the corresponding period of the previous year stood at 4.1 per cent, the CSO said.
Manufacturing sector, which accounts for more than three-fourths of the entire index soared 8.7 percent in January as compared with 8.5 percent in December, led by an improved production of consumer durables and continued double-digit growth of consumer non-durables as well as capital goods. It grew by 8.7 percent during the month as compared to 2.5 percent in January 2017, showing signs of recovery in the economy.
While the price rise in food segment was 3.26% in February, it was 17.57% in vegetables.
The central bank expects retail inflation to pick up to 5.1 per cent to 5.6 per cent in April-September before easing, assuming normal rainfall.
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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.
"The sharp dip in retail inflation in February has reinforced our expectation that the MPC would keep the repo rate unchanged in the upcoming policy review in April, which may prompt a further easing of bond yields in the immediate term", said Aditi Nayar, Principal Economist, ICRA, warning that inflation may see a spurt in the coming months.
Consumer non-durable goods, which are mainly fast moving consumer goods, too showed an increase of 10.5% as against a growth of 9.6%. It was 4.88 percent in November a year ago. "This is the third consecutive month in which factory output has clocked a high single digit growth". Particularly heartening is the third consecutive month of double digit growth recorded by the capital goods sector a proxy for investment demand.
The mining sector, however, was a laggard at 0.1% growth compared to 8.6% a year ago.
According to Devendra Pant, Chief Economist at India Ratings, robust growth of consumption-related sectors will provide stability of Gross Domestic Product (GDP) growth in the next financial year as private final consumption expenditure (PFCE) is the biggest component while calculating GDP.