Consumer Price Index (CPI)-based retail inflation rose to 5.03 per cent in February, mainly on account of higher food prices. The retail inflation was 4.06 per cent in January 2021 and 6.58 per cent in February 2020.

Food inflation rose steeply to 3.87 per cent in February compared to 1.89 per cent in the previous month. The February CPI is the last CPI inflation print before the Reserve Bank of India (RBI) announces its revised monetary policy framework, reviewing its 4 +/-2 per cent inflation band by the end of the month.

Within the food items, the rate of fall in vegetable prices was at 6.27 per cent in February as against 15.84 per cent in the previous month. Inflation in fuel and light category remained elevated at 3.53 per cent during February compared to 3.87 per cent in January.

The RBI, which looks at the inflation level in the economy while deciding on the key policy rates, suggested recently in a report on Currency and Finance 2020-21 that the current mandate of 2 to 6 per cent inflation target for the monetary policy was appropriate and should continue for the next five years.

Meanwhile, the Index of Industrial Production (IIP) contracted by 1.6 per cent for January 2021, according to data released by the Ministry of Statistics and Programme Implementation (MoSPI). The industrial output had risen by 1 per cent in December 2020 and grown by 2 per cent in January 2020.

The manufacturing sector output contracted by 2 per cent in January, while the mining output declined by 3.7 per cent. Power generation grew by 5.5 per cent in January.