Published: Thu, March 15, 2018
Economy | By

Inflation falls to 4.4 per cent, factory growth rises

Inflation falls to 4.4 per cent, factory growth rises

The Bureau of Labor Statistics released the February Consumer Price Index data this morning.

Following the softening of consumer price index (CPI) inflation and a 7.5 percent hike in the Index of Industrial Production (IIP) numbers, the State Bank of India opined that the latter may touch double-digit figures in February this year.

Consumer prices south of the border rose 0.2% in February, in line with expectations and likely alleviating concerns that inflation is about to accelerate, according to the Labor Department. In the CPI data, year-over-year inflation for commodities (excluding food and energy) was -0.5 percent - prices fell.

It still is the best of times for the United States economy for in spite of President Donald Trump's micro-management the S&P 500 index remains 3.4% in the green so far this year and 10-year bond yields have fallen from the 2.94% high recorded in late February to 2.84% overnight.

Despite a dip in retail inflation in February, the Reserve Bank of India is unlikely to reduce key policy rates in 2018, analysts at brokerages said on Tuesday.

Prices for women's and girls' apparel increased 1.5% in February, while men's and boys' clothing prices were up 1.7%. "The 12-month change in the core CPI remained at 1.8% in February for the third consecutive month".


Including energy and food prices, the annual inflation reached 2.2% against 2.1% in January.

The inflation-adjusted hourly rate of pay reported growth of 0.4% yoy against a 0.7% rise in January. Policymakers consider the labor market to be near or a little beyond full employment.

Some investors and economists are forecasting the Fed may raise rates a fourth time if economic growth appears to be accelerating more quickly than Fed policymakers expected.

During the month, the highest increases were seen in prices of Fuel and lubricants for personal transport equipment, Maintenance and fix of personal transport equipment, Narcotics, Vehicle spare parts, Passenger transport by air, Clearing, fix and hire of clothing, Hospital services, Domestic services and household services and Glassware, tableware and household utensils.

This showed about 0.29 percent point lower from 16.22 percent recorded in January 2018. February's "unusually soft" readings on shelter and medical care, the two largest components of the core consumer price index, are unlikely to persist, he wrote in a note.

Fuel and light inflation stood at 6.8 per cent, compared with 7.58 per cent in January, while housing inflation stood at 8.28 per cent, from 8.33 per cent the previous month. We expect core inflation to ease further in February, given improvement in FX liquidity; external reserves grew by 4.44% month-on-month, from USD40.69bn to USD42.49bn.

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