With sharp drop in kitchen staples such as vegetables and pulses, country’s retail inflation eased to record low of 2.18 per cent in May for the first time since January 2012, but factory output slipped to 3.1 per cent in April as against 6.5 per cent a year ago, according to the data released by the Central Statistics Office (CSO) on Monday.
As far as retail inflation is concerned, the sudden fall in prices, it appears, could trigger the pressure on the Reserve Bank of India (RBI) to cut interest rates to support economic growth of India. As per the CSO data, food prices saw deflationary trend in May (-1.05 per cent) and the prospect of good monsoon is likely to keep food inflation in check.
Also, the data showed that the index of industrial production (IIP) slowed marginally to 3.1 per cent in April from 3.8 per cent a month ago, possibly because of lagged impact of note ban in November 8 last year followed by lukewarm response of core sector growth. “The worst performing sectors in April were manufacturing, capital goods and consumer durables,” the data revealed.