Retail inflation hits 16-mth high in January at 5.69%

Sanjeev Sharma

Tribune News Service

New Delhi, February 12

The already lacklustre economy has come under more strain as latest data showed that consumer inflation for January hit a 16-month high while industrial production for December turned negative.

The retail inflation, which has been moving up for six months, hit a 16-month high of 5.69% in January, mainly on account of costlier food prices.

Industrial production declined for the second month in a row, registering negative growth of 1.3% in December.

Analysts said the management of the macro-economy will become more difficult. Sunil Kumar Sinha, principal economist, India Ratings, said as both high frequency data show deterioration, the macroeconomic management of the economy by the government as well as RBI is going to be more difficult ahead particularly when the Union Budget is due by the end of this month.

Retail inflation, as measured by the Consumer Price Index (CPI), stood at 5.61% in December 2015 and 5.19% in January 2015. The pace of retail price rise in January 2016 is the highest since 6.46% in September 2014. Food inflation rose to 6.85% in the first month of 2016.

Commenting on the industrial production numbers, Sinha said a second consecutive month of negative growth in factory output once again demonstrates that the industrial recovery is still uneven and fragile. A sustained growth in consumer durables for seventh consecutive month which came in at 16.5% in December 2015 though is a silver lining, a double-digit decline in the capital sector growth for the second consecutive month is a dampener.

Analysts said the high price of pulses is a concern. Aditi Nayar, senior economist, ICRA, said food prices were relatively sticky in January 2016, with the month-on-month fall in prices of pulses, fruits and vegetable offset to a large extent by substantial increases in sugar and protein items like meat, fish and eggs. The high prices of pulses are a source of concern, given the shortfall in rabi sowing.

“The decline in rabi sowing across most crops, weak winter rainfall and low reservoir storage paint a discomfiting picture”, she added.

Industry body Assocham expressed concerns on the industrial performance in December.

“Estimates of industrial production mirrored the subdued industrial activity in the country and call for urgent policy remedies,” said Sunil Kanoria, president, Assocham.

“Negative growth in manufacturing and indifferent growth in mining have got wider implications and needs to be addressed on priority basis,” said Kanoria.