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23-02-2026
Bureau Report
NEW DELHI/ BENGALURU: India’s private sector accelerated in February led by robust demand for goods even as services growth was broadly steady, according to a survey that also showed intensifying inflationary pressures.
HSBC’s flash India Composite Purchasing Managers’ Index (PMI), compiled by S&P Global, rose to 59.3 in February from January’s 58.4, the strongest in three months and above a media poll median forecast of 59.0. The 50-mark separates expansion from contraction.
The improvement was supported by robust total new orders which rose at the quickest pace since November. Businesses attributed gains to strong demand, local tourism and marketing efforts. International sales also increased at the fastest pace in five months, bolstering overall demand.
Goods producers reported a sharper rise in sales, pushing output growth to a four-month high. Services firms, however, saw growth in new business ease to a 13-month low, even as they outperformed manufacturers on export orders.
While the preliminary headline reading for manufacturing PMI rose to 57.5 from 55.4, the services PMI was little changed at 58.4 versus 58.5 in January.
Better sales supported hiring at a faster pace and optimism about year-ahead activity improved to its strongest in a year.
The survey also showed higher price pressures with input costs rising at their fastest rate in 15 months and pushing overall output charge inflation to a six-month high. Services firms faced the steepest rise in input price inflation in two-and-a-half years, while factory input price inflation remained unchanged from January.
That combination of solid growth and rising costs, especially for services, will keep the Reserve Bank of India cautious as retail inflation rose 2.75% last month, after the statistics ministry updated the consumer price index basket and the base year to 2024. The central bank is expected to hold its key policy rate at 5.25% this year, according to a media survey.
Last month, India’s key inflation rate accelerated to 2.75% in January, the maiden print under a revised data series showed on Thursday, returning to the central bank’s target band for the first time since August.
The new series seeks to capture changing consumption patterns in the world’s most populous country, with revised weighting for components such as food and housing and an updated base year of 2024. In one of the most notable changes, the government has sharply cut the weightage of food, one of the most volatile components of the retail price index, to roughly 37% from around 46% earlier.
Benign inflation and high economic growth have prompted the Reserve Bank of India (RBI) to cut interest rates steeply over the last year, even though it held rates earlier in February. The RBI targets inflation in a 2%-6% range. Last week, the central bank raised its inflation projection for the current financial year to 2.1% from 2%.
The January inflation print was higher than a media poll projection of 2.4%. Annual retail inflation (INCPIY=ECI), opens new tab under the old series stood at 1.33% in December.
India’s late September consumption tax cuts are expected to keep inflation in check going ahead, while an interim trade deal with the US has lifted a key overhang for the economy, which is estimated to grow between 6.8% and 7.2% in 2026/27.
“We do not expect the new inflation series to materially influence policy in the near term. An extended rate pause looks likely, underpinned by a cyclical upturn in both growth and inflation and improving confidence following the conclusion of the US–India trade negotiations,” said Madhavi Arora, chief economist at Emkay Global Financial Services.
