Retail inflation rose to a four-month high of 5.52 per cent in March, driven by higher fuel and food prices, while factory output contracted to a six-month low of 3.6 per cent in February because of the poor performance of the manufacturing and mining sectors.

The consumer price index (CPI) based retail inflation stood at 5.03 per cent in February. The rate of price rise in the food basket accelerated to 4.94 per cent in March against 3.87 per cent in the preceding month, according to data released by the National Statistical Office (NSO).

Inflation in the fuel and light category was 4.50 per cent during the month vis-a-vis 3.53 per cent in February.

Madan Sabnavis, chief economist, Care Ratings, said, “With renewed pandemic restrictions across the country, elevated global prices across commodities and higher transportation and logistics cost, price pressures are likely to prevail in the coming months for most segments. At the same time, the headline inflation reading could benefit from the higher base of a year ago.”

Output falters

The manufacturing sector — which constitutes 77.63 per cent of the index of industrial production (IIP) — declined 3.7 per cent in February 2021.

The mining sector output declined 5.5 per cent in February 2021. However, power generation grew marginally by 0.1 per cent in the month under review.

“On average, the IIP has risen by a marginal 0.1 per cent in September 2020-February 2021, highlighting that the recovery in industrial volumes lacks conviction,” Aditi Nayar, chief economist at Icra, said.