Retail inflation at 4-mth low of 4.44% on cheaper food, fuel

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The Labor Department said on Tuesday its Consumer Price Index rose 0.2 percent last month after jumping 0.5 percent in January.

In December, the index of industrial production (IIP) grew 7.1%, while consumer price index (CPI)-based inflation had slowed to 5.1% in January.

In a sustained improvement in economic conditions, retail inflation in February eased as food prices softened, while industrial production soared in January. Moreover, core inflation is sticky at around 5 percent, while an imposition of more tariffs on some imports like mobile phones is likely to boost price pressures, giving the RBI more ammunition to wait and watch. Focus now turns to United States consumer price data due later on Tuesday for the global markets to gauge inflation trends in the world's largest economy and as a guide for upcoming Federal Reserve policy. However, at its December 2012 FOMC meeting, the inflation ceiling was raised to 2.5%, while its accommodative measures (low Fed Funds Rate and quantitative easing) were in place.

Inflation in pulses and spices witnessed fall in price rise.

The Consumer durables and Consumer non-durables have recorded growth of 8.0percent and 10.5% respectively. Inflation for the fuel and light category was at 6.80 per cent in February against 7.73 per cent in January.

While the price rise in food segment was 3.26% in February, it was 17.57% in vegetables. It grew by 8.7 percent during the month as compared to 2.5 percent in January 2017, showing signs of recovery in the economy.

The unemployment rate held steady at a 17-year low of 4.1% in February as the labour force participation rate jumped to 63.0% from 62.7% in January, reflecting increased confidence among jobseekers of finding employment.

The S&P 500 and the Dow slipped on Monday as the US tariffs signed into law last week weighed on industrials, while a rise in tech stocks boosted the Nasdaq to a new record high. Over the past 12 months, food prices are up 1.4%. "Some uptick can happen, however, we do not see the risk of inflation going beyond 6 percent". It was at 5.07 percent in January.

Food and beverages price inflation stood at 3.38%, while prices of pan, tobacco and intoxicants went up 7.34%.

November. Electricity growth was also impressive at 7.6% (4.4%).

"The broader story remains that of US monetary policy normalization in the backdrop of an improving economy and a further decline in currency market volatility would only fuel more risk taking appetite", said Commerzbank's FX strategist Thu Lan Nguyen.