Factory output contracts for second straight mth; retail inflation inches up


India’s factory output contracted for the second consecutive month in February, shrinking by 3.6 per cent on the back of lower production in mining and manufacturing sectors, according to government data released on Monday. Retail inflation in March, meanwhile, rose to a four-month high of 5.52 per cent on the back of higher food and fuel prices.

The output of the manufacturing sector — accounting for 77.6 per cent of the Index of Industrial Production (IIP) — fell 3.7 per cent in February, while the output of the mining sector, accounting for 14.4 per cent of the IIP, fell by 5.5 per cent in February. The industrial output had registered a decline of 0.9 per cent in January.

Experts said that five of the six use-based segments saw a contraction in output in February as against a contraction in only three in January. They did, however, say that February’s contraction could be attributed in part to an adverse base effect as output in February 2020 was at a 16-month high.

Inflation, as measured by the Consumer Price Index (CPI), rose to 5.52 per cent in March from 5.03 per cent in February, bringing total retail inflation for 2020-21 to the highest level in seven years, according to data released by the National Statistical Office.

Core inflation, exclusive of food and fuel inflation, rose to a 29-month high of 5.96 per cent. Food inflation rose to 5.2 per cent despite a month-on-month decline in prices of vegetable, cereals, spices, eggs and sugar due to a low base effect, and is likely to fall to 2-2.5 per cent in April as the base effect reverses, as per experts.

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