Retail inflation slowed for the third consecutive month to a two-year low in February, data released on Wednesday showed, providing election-eve relief to the incumbent Congress-led United Progressive Alliance (UPA) and political parties that are in power in the states. Inflation measured by the Consumer Price Index (CPI) decelerated to 8.1% last month, from 8.79% in January. Significantly, the rate is now closer to the target of 8% set for January 2015 by a Reserve Bank of India (RBI) committee led by deputy governor Urjit Patel. Separately, new data put out by the government showed that factory output grew by a meagre 0.1% in January after having contracted for three consecutive months, in an indication that industrial recovery is still far off. Still, the number is expected to improve starting in February, with excise duty cuts boosting auto sales, Citigroup India economist Rohini Malkani wrote in a research note. Industrial output had fallen 0.2% in December from a year earlier, according to the revised number. Together with the wholesale price index-based inflation data to be released on Friday, the latest updates on the state of the economy will provide crucial inputs to RBI ahead of the monetary policy review due on 1 April. A relentless rise in prices in the past couple of years, coupled with faltering economic growth, has hurt the electoral prospects of the incumbent UPA, which has been in power for 10 years. It’s seeking a third successive term in the general election due to kick off from 7 April and conclude on 12 May. In the state assembly elections last year in November-December, the Congress suffered defeat in four of the five states that went to polls. Congress leaders have attributed the party’s setbacks to the persistent inflation, especially high vegetable prices.
Posted on: Thu, 13 Mar 2014 04:47:45 +0000
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