Meanwhile, India's industrial production contracted by 3.6% in February, official data showed.

Man buying vegetables at a vegetable market
Money Inflation Monday, April 12, 2021 - 18:29

Retail inflation rose to 5.52% in March, mainly on account of higher food prices, government data showed on Monday. The consumer price index (CPI) based retail inflation stood at 5.03% in February.

The rate of price rise in the food basket accelerated to 4.94% in March, as against 3.87% in the preceding month, as per data released by the National Statistical Office (NSO). Inflation in 'fuel and light' category was 4.50% during the month vis-a-vis 3.53% in February.

It was at 4.61% in rural areas and 6.52% in urban areas. 

Earlier this month, the Reserve Bank of India had projected the retail inflation at 5% in the January-March quarter of 2020-21 and 5.2% in the first two quarters of the current fiscal.

After breaching the upper tolerance threshold of 6% for six consecutive months (June-November 2020), CPI inflation fell in December 2020 and eased further in January 2021 to 4.1% on the back of a sharp correction in vegetable prices and softening of cereal prices.

However, it rebounded to 5% in February, driven primarily by base effects.

The Reserve Bank, which mainly factors in the retail inflation while arriving at its monetary policy, has been asked to keep CPI inflation at 4% with a margin of 2% on either side.

The central bank retained the key lending rate (repo) in its last monetary policy citing inflationary concerns.

Meanwhile, according to the Index of Industrial Production (IIP) data released by the National Statistical Office (NSO), India's industrial production contracted by 3.6% in February, official data showed. Manufacturing sector output declined by 3.7% in February 2021.

Mining output slipped 5.5%, while power generation grew by 0.1% in February. The IIP had grown by 5.2% in February 2020.

During April-February, IIP contracted by 11.3% compared to one% growth in the corresponding period of 2019-20.

Industrial production has been hit due to the COVID-19 pandemic since March last year when it contracted by 18.7%.

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