CPI & IIP - Karan Mehrishi, Lead Economist at Acuité Ratings & Research Limited
"The CPI print reinforces our belief that food inflation will continue to be stickier than the market expectations. CPFI has inflated by 10.8% in Feb 2020, driven by persistently high prices of vegetables (31.6%) and importantly, the protein based food categories such as meat and fish, egg and milk products where the inflation was maintained in the band 6%-10%. However, there may be a temporary reprieve in the inflation of meat and egg due to the corona virus scare and further, the effect of the rabi production will be seen from April onwards. There is no significant change in the core inflation and with an expectation of a drop in retail fuel prices, it should witness a moderation in the near term. Overall, we can expect a gradual drop in the CPI headline print in the months ahead."
"The IIP print of January 2020 show moderate green shoots in the economy with the expansion of the production of intermediate goods by 15.8%. It is possible that the intermediate goods producers in India have been able to capitalize on the supply chain disruption in China arising from the virus scare. With lower capacity utilisation in most sectors and private sector capital expenditure still some distance away, the capital goods segment continues to be subdued. The same messages can be derived from the economic activity based approach where the manufacturing sector grew by 1.5% yoy. Along with 3.1% growth in electricity and 4.4% growth in mining, we can hope to see a moderate revival in domestic demand that can pull up the overall IIP growth of 0.5% in the April- Jan period."