Retail Inflation Eases To 4.28% In March; Factory Output Grows 7.1%

INSUBCONTINENT EXCLUSIVE:
The RBI last week lowered its inflation forecast for April-September to 4.7-5.1%
Retail or consumer inflation eased for the third straight month in March to 4.28
Factory output data, which was also released on the same day, showed industrial production - based on Index of Industrial Production (IIP) -
But the IIP numbers were better than what economists had expected
inflation to soften to 4.20 per cent from 4.44 percent in the previous month
Last week, the Reserve Bank of India (RBI) kept its repo rate - the key rate at which it lends to banks - on hold and sharply cut its
projection for price rises from April through September.The Monetary Policy Committee (MPC) lowered its inflation forecast for
April-September to 4.7-5.1 per cent from 5.1-5.6 given at the February meeting.However, analysts remain cautious on inflation given the
sharp hike in global crude prices
An increase in MSP of agricultural produce, hike in allowances to employees of state governments, high government spending ahead of
elections and pass-through of the past increase in commodity prices are all likely to add to the inflationary pressure, said Teresa John,
economist at Nirmal Bang."We expect that inflation expectations in the period ahead will possibly be shaped by oil price movement, impact of
minimum support prices inclusion, fiscal slippage as GST collections remain low, and monsoon forecasts
A greater challenge would be for the RBI to set policy sentiments correctly in the coming period as higher yields, inflationary pressures
and election cycle in India and US both are likely to lead to market volatility
We expect inflation prints to hover around the 5-percent mark in FY18-19," said Anis Chakravarty, lead economist and partner, Deloitte
India, Mumbai.Economists expected factory output growth at 7 per cent in February
Infrastructure output, which comprises eight core industries and accounts for nearly 40 per cent of total industrial production, grew 5.3
per cent in February from a year ago.