India's Industrial Output Falls Unexpectedly In February

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From a sectoral viewpoint, 15 out of the 22 industry groups recorded a fall on a year-on-year basis, the government said in the update for index for industrial production (IIP), or factory output. The Index of Industrial Production, IIP, had grown 1.99 per cent in February a year ago.

Latest data shows that capital goods output, a metric to gauge capacity additions by companies, shrank -3.4 percent in February from 10.7 percent in January. Consumer goods production slumped to (-) 5.6 per cent in February from a 0.6 per cent growth in the same month a year ago. Even though Urban Combined Food Prices Inflation edged higher to 2.27 per cent in March from 1.87 per cent in Februray, rural food inflation decreased to 1.85 per cent in March from 2.08 per cent a month ago.

Consumer food price inflation however, eased to 1.93 per cent in March as compared to 2.01 per cent in February.

Industrial growth contracted unexpectedly in February while consumer inflation quickened to a five-month high in March, a double setback for the Indian economy as it enters the new financial year.

Industrial output contracted by 1.2% in February while the retail inflation rose to 3.81% in March, prompting the industry to pitch for more reforms to deal with economic woes. As per inflation data, protein rich items such as milk and products and eggs were costlier during the month with inflation prints of 4.69 per cent and 3.21 per cent, respectively.

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Prices of prepared meals, snacks and candies grew by 5.65 per cent.

Meanwhile, retail inflation rose marginally to 3.81 per cent in March from 3.55 per cent in February 2017.

The rate of price rise in fuel and light was at 5.56 per cent.

The weak industrial activity at the start of the year is likely to raise doubts over whether the eurozone's economic recovery is gathering speed in the way suggested by recent surveys. If this is so, the RBI inflation forecast of 4-4.5 per cent will be materially undershot.