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Retail Inflation Rises For The 6th Straight Month In Jan; Industrial Production In Dec Shrinks

Olga Robert

Retail inflation in India continued to accelerate for the sixth straight month in January while factory output showed negative growth in December.

CPI (Consumer Price Index) in January rose to 7.59 percent compared to 7.35 percent in the previous month, on account of higher food prices, as per data released by the National Statistical Organisation on Wednesday. It is the highest since May 2014 and the second consecutive month that CPI has breached upper band of RBI's inflation target.

IIP (Index of Industrial Production), a measure of factory output, contracted by 0.3 percent in December after growing at 1.8 percent in the previous month. The decline was led by the manufacturing sector that contracted by 1.2 percent compared to growth of 2.9 percent in the same month a year ago.

Electricity generation fell 0.1 percent as against a growth of 4.5 percent in December 2018.

However, the mining sector output grew by 5.4 percent compared to a contraction of 1 percent earlier.

IIP growth during April-December period of the current fiscal year decelerated to 0.5 percent from 4.7 percent expansion in the same period of 2018-19.

Food inflation last month was 13.63 percent, down from 14.19 percent in December but much higher compared to (-)2.24 percent in January 2019.

The NSO has estimated India's economic growth to hit an 11-year low of 5 percent in 2019-20 on sluggish consumption and investment demand.

RBI's Monetary Policy Committee on 6 February left policy rates unchanged for the second time, citing evolving growth-inflation dynamics. It also sharply raised CPI projection to 6.5 percent for the fourth quarter of 2019-20 from 5.1-4.7 percent earlier.

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