India's factory production in January up 7.5% over a year ago

E-mini S&P 500 Index

E-mini S&P 500 Index

Gas prices and the cost of hospital services declined, but apparel prices and auto insurance rates spiked, which ticked the overall rate higher, Bank of Montreal economist Robert Kavcic noted.

The country's industrial production, however, rose by 7.5% in January, backed by growth in manufacturing, consumer and capital goods sectors. The CPI was up 2.2% in the 12 months through February, compared with 2.1% in January, while the core index increased 1.8% from a year earlier for a third month.

The indexes for shelter, apparel, and motor vehicle insurance all rose and contributed to the 1-month seasonally adjusted increase in the all items index. It then grew by 7.06 per cent in December and by 3.5 per cent in January 2017.

With a fall in vegetable prices and recent financial market developments, the report highlighted that a "Pandora's Box" has been opened for the RBI, awaiting its response. Economists were expecting to see a 0.2% rise in price pressures. Besides, industry bodies yet again nudged RBI to lower interest rate as retail inflation fell to a 4-month low.

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Risks like the higher minimum support prices (MSPs) for food grains promised in the budget, according to them, can push up the inflation in the next fiscal year.

"The sharp dip in retail inflation has reinforced our expectation that the MPC would keep the repo rate unchanged in the upcoming policy review in April, which may prompt a further easing of bond yields in the immediate term", Aditi Nayar, economist at ICRA Ltd. said referring to the central bank's Monetary Policy Committee that's scheduled to meet April 4-5. Cumulatively, for April-January, industrial output growth continued to remain lower at 4.1 per cent as against 5 per cent in the same period a year ago. The headline number rose by 313,000 jobs last month, boosted by the largest rise in construction jobs since 2007, the Labor Department said.

Compared to the same month a year ago, consumer prices were up by 2.2% in February, reflecting a modest acceleration from the 2.1% increase in January. While pulses declined by 17.35% in January, spices came down by 1.01%, government data showed. However, mining grew by a mere 0.1 per cent in the month. Signs of a thaw in rural demand were visible with rural CPI crashing by 84 basis points from the earlier month, ' the report stated. Strong IIP growth of 7.5 percent in January; capital goods grow by 14.6 percent; manufacturing at 8.7 percent; infrastructure/construction goods at 6.8 percent.

The consumer durables and consumer non-durables have recorded growth of eight percent and 10.5 percent respectively. It looks like post-demonetisation and GST implementation finally the industrial sector is gaining traction. It was much lower at 2.01 per cent in February 2017. The rising trend in manufacturing growth also shows that the underlying growth momentum is positive.

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