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Feb CPI may inch to 5.26%; Jan IIP slowdown to 0.5%

The rise in CPI is expected mainly due to food inflation. Food inflation in the previous month inched up to around 6.13 percent versus 4.78 percent month-on-month.

The February consumer price index (CPI) data and the January index of industrial production (IIP) numbers will be released today. The CPI is estimated to inch up to 5.26 percent compared to 5.11 percent in the previous month.

The rise is expected mainly due to food inflation. Food inflation in the previous month inched up to around 6.13 percent versus 4.78 percent month-on-month.

According to economists, retail prices for rice as well as wheat have risen month-on-month by around 4 percent to 3.3 percent respectively. Besides that, pulses have seen a steeper increase; it is up around 18 percent on the retail side. All these factors may contribute to higher food inflation.

The unseasonal rains will see an impact only in the March CPI data and that would come with a bit of a lag. Diesel and petrol prices are now a part of transport and communication which is a part of miscellaneous segment of CPI and has higher weightage now when compared previously.

Therefore, diesel and petrol prices or transport inflation could see a higher up tick and hence miscellaneous could see a higher up tick based on the fact that there were two diesel and petrol price hikes that took place in February itself.

The last one was on the February 28 which was steeper over Rs 3 rise for both. However, there was also a rise on February 16 that will be counted into this inflation figure.

Overall, expect an inch up but the range is suggesting that maybe there could be some amount of softening as well but the inch up will be mainly because of food inflation.

The IIP for January is expected to come in at a growth of around 0.5 percent versus 1.7 percent month-on-month. The range for IIP is anywhere with a decline of 1.7 percent to a growth of 2.3 percent this time around. This is because core sector growth wasn’t inspiring, in fact, it was the slowest in a year at 1.8 percent. Auto production for January eased to around 2 percent growth versus 6 percent in December 2014; as per Society of Indian Automobile Manufacturers (SIAM) data.

Exports had contracted 11.2 percent in the month of January and the Nokia plant shutdown will be seen on a year-on-year basis. Consumer durables have been contracting since June 2014. It eased to a decline of 9 percent in the previous month versus 14.5 percent on a month-on-month basis.

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