India Inflation Eases To 15-Month Low; Industrial Production Growth Improves

India’s consumer price inflation eased more-than-expected in March to its lowest level in fifteen months amid a slowdown in food prices to be back within the Reserve Bank Of India’s target range, while industrial production growth improved slightly in February, data from the National Statistical Office showed on Wednesday.

The consumer price index climbed 5.66 percent year-over-year in March, which was slower than the 6.44 percent rise in February. Economists had forecast the rate to drop to 5.80 percent.

In the same period last year, inflation was 6.95 percent.

Inflation returned within RBI’s tolerance band of 2-6 percent for the first time since December.

Nonetheless, the inflation rate was above the central bank’s medium-term target of 4.0 percent.

The RBI unexpectedly left its key interest rate unchanged this month after raising it aggressively in the past several policy sessions.

RBI Governor Shaktikanta Das said overall inflation is above target and, given its current level, the present policy rate can still be regarded as accommodative.

The central bank downgraded its inflation outlook to 5.2 percent from 5.3 percent for the financial year 2023-24.

Food price inflation moderated to 4.79 percent in March from 5.95 percent in the prior month, largely led by an 8.51 percent plunge in vegetable prices.

Prices for clothing and footwear rose 8.18 percent annually in March, and those for fuel and light grew 8.91 percent.

On a monthly basis, consumer prices moved up 0.23 percent in March, and food prices showed a similar kind of increase of 0.29 percent.

Separate official data showed that industrial production expanded 5.6 percent year-over-year in February, slightly above the revised 5.5 percent growth seen in January. Economists had forecast 5.1 percent growth.

Among the three main sectors, electricity production advanced the most, by 8.2 percent. This was followed by a 5.3 percent increase in manufacturing production. Mining output also logged a positive growth of 4.6 percent.

In the April to February period, total industrial production was 5.5 percent higher compared to the same period a year ago.

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