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Business Standard
14-05-2025
- Business
- Business Standard
WPI inflation falls to 13-month low in April as food, fuel become cheaper
Inflation based on the wholesale price index (WPI) declined to a 13-month low of 0.85 per cent in April from 2.05 per cent in March, on the back of a dip in the prices of food and fuel and power. Price rise also decelerated in the manufactured products category, according to data released by the Ministry of Commerce and Industry on Wednesday. Prices of primary food articles witnessed a deflation after 27 months (of -0.86 per cent). The trend was led by the sharpest declines in the prices of vegetables (-18.26 per cent) since October 2023 and pulses (-5.6 per cent) since October 2018. Potato prices declined 24.3 per cent. Protein-rich food like eggs, meat and fish declined by 0.29 per cent – the first time it happened so since October 2024. Onion price increased 0.2 per cent in April, the slowest in 22 months. Price rise for other food items like paddy (1.87 per cent), cereals (3.81 per cent), fruits (8.38 per cent) and wheat (7.41 per cent) decelerated, too. Easing food inflation is expected to give relief to households and help consumption demand in FY25. Rahul Agrawal, senior economist at ICRA Ratings, said that WPI inflation is expected to soften further in May, aided by a favourable base and trends in wholesale prices of essential food items. Fuel and power prices declined by 2.2 per cent in April. Deceleration in global commodity prices, especially of mineral oils, led to a decline in the prices of kerosene, air turbine fuel and petrol. The prices of petrol (-7.7 per cent) and high speed diesel (-5.04 per cent) declined for the 11th and 24th month straight. Cooking gas price dipped (-0.41 per cent) for the first time since April 2024. Among manufactured products, prices of cement, lime and plaster continued in deflation (-1.42 per cent) for the 16th month straight. Prices of basic metals dipped (-0.64 per cent). The price rise of other major manufactured goods like textiles (0.52 per cent), apparel (0.65 per cent), paper and paper products (2.1 per cent), pharmaceuticals (0.98 per cent), semi-furnished steel (0.25 per cent) and food products (9.51 per cent) decelerated in April. However, the price rise for manufactured vegetable and animal oils, despite deceleration remained in double digit (28.7 per cent) during April. ALSO READ: Paras Jasrai, associate director at India Ratings and Research, said that the decline in manufactured products' prices was broad based as core inflation moderated after increasing for six months. Manufactured products' prices were at a three-month low of 1.3 per cent in April as base metal prices declined. 'The temporary lowering of tariffs by the US and China helps in controlling the heightened uncertainty and volatility. Muted commodity prices along with a favorable base effect for the food segment would keep the wholesale inflation around 0.5 per cent in the near term,' he said. The drop in WPI inflation comes a day after India's retail inflation moderated to nearly six-year low of 3.16 per cent, aided by a double-digit dip in vegetable prices and the deepest decline in pulses prices in over six years. 'This dual disinflation offers a substantial macroeconomic tailwind, with the pricing environment favorable for rural consumption recovery. This strengthens the case for future rate cuts - a move that will lower borrowing costs, revive capex appetite among corporates and offer rate sensitive sectors a timely boost,' said Mahendra Patil, managing partner, MP Financial Services.
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Business Standard
28-04-2025
- Business
- Business Standard
India's IIP growth recovers to 3% in March, FY25 output at 4-year low
Growth in industrial production recovered slightly to 3 per cent in March from a six-month low of 2.72 per cent in February as a high base and lacklustre demand kept output expansion in check, data released by the statistics ministry on Monday showed. In March 2024, the IIP had grown by 5.4 per cent. The slight gain in the index of industrial production (IIP) for March came on the back of the acceleration in the electricity sector (6.3 per cent) and a mild uptick in that of the manufacturing sector (3 per cent). This was, however, offset by the dip in the growth of the mining sector (0.4 per cent). According to use-based classification, infrastructure goods (8.8 per cent) and consumer durables (6.6 per cent) grew at a robust rate, while output in capital goods (2.4 per cent) decelerated. The primary goods (3.1 per cent) and intermediate goods (2.3 per cent) saw slight acceleration in output. Meanwhile, contraction in the output of consumer non-durables (-4.7 per cent) deepened further and stayed in negative territory for the fourth month in a row. Rajani Sinha, chief economist at Care Ratings, said that the manufacturing sector in March may have benefited from inventory accumulation by companies ahead of the anticipated announcement of reciprocal tariffs. However, monitoring consumption trends remains critical, given the ongoing unevenness in the domestic demand landscape. 'While rural demand is showing signs of recovery, lagging urban demand continues to be a concern. Factors such as declining inflation, healthy agricultural activity, lower borrowing costs, and a reduced income tax burden are expected to support consumption demand going forward,' she added. Overall, IIP growth for FY25 stood at a four-year low of 4 per cent, thus reflecting subdued industrial growth during the year. In comparison, IIP had grown by 5.9 per cent in FY24. Previously, IIP had contracted 8.4 per cent in FY21 during the pandemic. Madan Sabnavis, chief economist at Bank of Baroda, says that industrial growth has been more subdued this year with the consumption side of the story having a major influence. Data shows that the consumer non-durable segment contracted by 1.6 per cent in FY25, while growth in infrastructure industries (6.6 per cent), intermediate goods (4.1 per cent), capital goods (5.5 per cent) and primary goods (3.9 per cent) decelerated during the year. However, the consumer durable segment did well for the year with growth of 7.9 per cent being driven by electronics, computers etc. Starting April 2025, IIP data is now being released on the 28th of every month, thus bringing down the time lag from 42 days to 28 days from the reference month and also doing away with the second revision of IIP. Aditi Nayar, chief economist at ICRA Ratings, says that the lower response rate associated with the advancing of the data release has dampened the estimated growth rate for March, which may subsequently undergo a relatively larger revision as compared to that seen in the past.
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Business Standard
21-04-2025
- Business
- Business Standard
Core sector growth rises slightly to 3.8% in March, shows govt data
India's core sector growth rose by 3.8 per cent year-on-year (Y-o-Y) in March from an upwardly revised figure of 3.4 per cent in February, according to data released by the Ministry of Commerce and Industry on Monday. The growth was kept in check by a high base effect. In March 2024, core sector growth had stood at 6.3 per cent. The growth in March was led by the electricity sector (6.2 per cent), followed by steel (7.1 per cent), and cement (11.6 per cent). The core sector represents an index of eight main industries that measures the combined and individual performance of coal, crude oil, natural gas, refinery products, fertilisers, steel, cement, and electricity. These industries comprise 40.27 per cent of the weight of items included in the Index of Industrial Production (IIP). In March, output decelerated in coal (1.6 per cent), refinery products (0.2 per cent) and fertilisers (8.8 per cent). Meanwhile, the output in crude oil (-1.9 per cent) remained in contraction for the third successive month. Output in natural gas (-12.7 per cent) remained in contraction for the ninth successive month. Overall, for 2024-25 (FY25), growth in the output of core industries stood at 4.4 per cent — its lowest level in the past five years. In FY21, the core sector had recorded a growth of -7.8 per cent. In FY22, FY23 and FY24, it stood at 10.4 per cent, 7.8 per cent and 7.6 per cent, respectively. Aditi Nayar, chief economist, ICRA Ratings, said that the Y-o-Y rise in the core sector was led primarily by the higher growth in electricity generation amid rising temperatures. 'In disaggregated terms, the sequential trend was quite mixed, with fertilisers, coal, natural gas, and refinery products reporting a moderation in their Y-o-Y growth in March relative to the previous month,' she added. Madan Sabnavis, chief economist, Bank of Baroda said that the oil complex was subdued due to lower production of crude and natural gas due to low international price of crude. 'In the case of natural gas, higher imports substituted domestic production. Refinery products growth was flat at 0.2 per cent with lower prices and demand from exports affecting overall offtake,' he added. Data released earlier this month had shown that growth in industrial production slowed to a six-month low of 2.9 per cent in February from 5.2 per cent in January as a high base and lacklustre demand pulled it down. 'Based on the expansion in the core sector, ICRA expects IIP growth to print at 3-3.5 per cent in March 2025,' said Nayar.
