Consumer price index (CPI)-based inflation edged higher in March to 3.8%, driven by higher inflation in fuel, housing and clothing, and footwear. That compares with 3.7% in February. In March, fuel inflation (petrol, diesel, fuel and light) jumped over 190 basis points (bps) compared with February. However, core inflation stayed sticky (CPI excluding food, fuel and light rose mildly to 5%, while CPI excluding food, fuel, light, petrol and diesel was unchanged at 4.5%). The stubbornness in core inflation has kept the central bank vigilant on upside pressures.
After a positive upturn in January – negating the demonetisation impact on industrial activity – the Index of Industrial Production (IIP) took a U-turn and declined in February. In yet another indication of volatility, IIP registered a growth of -1.2% on-year in February after a positive growth of 3.3% (revised upwards from 2.7%) in January.