As against estimates, CPI inflation for the month of February has eased to 4.44% while still being higher than the RBI's targeted 4%. The lower inflation level has been reported on the backdrop of lower food prices. For the January month, consumer price index stood at a higher level of 5.1%. Meanwhile, IIP data for January has been upbeat at 7.5% against 7.2% in December.
CPI food inflation for the February month has been moved lower to 3.26% from 4.7% reported in January. The prices for vegetable and food moderated in the February month after the loss caused on account of unseasonal rains.
The sustenance of lower inflation depends on a multitude of factors including agricultural produce as well as fears of mounting crude oil price on the back of restriction in its production.
Core inflation was on the other hand recorded higher only to be offset by the decline in food inflation.
The increase in manufacturing as well as electricity generation output triggered a rise in IIP to 7.5% level for January. Manufacturing output grew to 8.7% while electricity production also remained upbeat at 7.6% as against 4.4% reported for the earlier month.
"Today's numbers will be a positive catalyst for the markets in the near-term. Yields are likely to enjoy a short-term relief, helped also by RBI's liquidity injection to meet end-quarter/end-fiscal year squeeze," Radhika Rao, India Economist, DBS Bank said.