CPI, IIP 12 March 2024

Bhavesh Sanghvi

March 12, 2024

Key highlights from the February Consumer Price Index (CPI) and January Index of Industrial Production (IIP) are as follows:

  • The CPI held steady at 5.1% in February, indicating a modest sequential price adjustment. The Reserve Bank of India (RBI) is closely monitoring for tangible signs of a slowdown in headline inflation, while the consistent easing in core CPI offers confidence that monetary policy interventions are positively impacting the economy. This suggests a continuation of the current policy stance, potentially leading to a 25-50 basis points rate cut in the latter part of FY25.
  • Core CPI declined to 3.4% year-on-year, extending its downward trajectory for the eighth consecutive month. Food prices saw a slight uptick of 11 basis points on a monthly basis after significant corrections in the preceding two months, while fuel prices decreased by 11 basis points. Housing, clothing, and pan/tobacco prices witnessed moderate increases.
  • Services CPI remained unchanged at 0.2% on a monthly basis, with notable price increases observed in medical care and household essentials. Other categories also experienced modest upticks.
  • IIP growth registered at 3.8% year-on-year, demonstrating robust expansion considering the elevated base. Mining, manufacturing, and electricity sectors posted growth rates of 6%, 3%, and 6% respectively. Notably, consumer non-durables, intermediate goods, and infrastructure goods emerged as top-performing segments.
  • Across sectors, 14 out of 23 industries progressed year-on-year. Growth was particularly strong in segments such as other transport equipment, fabricated metals, motor vehicles, beverages, basic metals, machinery, textiles, and electrical equipment. However, production declined in sectors like computer & electronics, tobacco products, paper products, chemicals, and food products.

In summary, the data reflects a stable CPI with gradual price adjustments and healthy IIP growth supported by various sectors despite certain segments experiencing production declines.