While the annual retail inflation eased for the third straight month in March to 4.28%, industrial output has seen a marginal decline in February to 7.13%. The good news is that on a year-on-year basis, the manufacturing sector has expanded by a healthy 8.7%. The broadening of industrial recovery was supported by positive growth of all six classifications of the IIP for four consecutive months. Leading indicators from the IIP data – primary and intermediate goods – indicate that the recovery will strengthen in the coming months.

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Slip in prices of vegetables, egg and milk has helped bring down the retail inflation for food and beverages in March. Analysts believe that a continued easing in prices of pulses, sugar and some vegetables would dampen the impact of the seasonal uptick in prices of various perishable items in April.

Meanwhile, the core inflation has risen to a 43-month high of 5.4% in March 2018. As of now, swelling international oil prices poses a risk to the inflation trajectory in the near term. These numbers have nearly ruled out a change in the repo rate or stance of monetary policy until there is greater clarity on the impact of the minimum support prices for various crops and monsoon play.