Industrial Output Growth Drops to 4.3%, Retail Inflation at 10-Month High

New Delhi:  India's industrial production growth slowed to 4.3% in July, dragged mainly by manufacturing sector's poor show, according to government data released on Thursday.

Factory output, as measured by the Index of Industrial Production (IIP), had expanded 6.5% in July 2018.

The industrial output growth was recorded at 1.2% in June and 4.6% in May this year.

According to data released by the Ministry of Statistics and Programme Implementation, industrial output grew at 3.3% in April-July period this fiscal, down from 5.4% growth in the same period a year ago.

The IIP data showed a significant slowdown in the manufacturing sector, which grew at 4.2% in July 2019 as compared to 7% a year ago.

Capital goods segment, which is a barometer of investment, saw a contraction of 7.1% in July compared with 2.3% rise a year ago.

Mining growth was 4.9% in July as compared to 3.4% in the same month last fiscal.

The expansion in the power generation sector stood at 4.8% in July, compared with 6.6% a year earlier.

As per use-based classification, the growth rates in July 2019 over July 2018 are 3.5% in primary goods, 13.9% in intermediate goods and 2.1% in infrastructure/construction goods.

Consumer durables and consumer non-durables have recorded growth of (-) 2.7%  and 8.3%, respectively.

In terms of industries, 13 out of 23 industry groups in the manufacturing sector have shown positive growth during July as compared to the same month a year ago.

The industry group 'manufacture of food products' has shown the highest positive growth of 23.4% followed by 17.3% in 'manufacture of basic metals' and 15% in 'manufacture of wearing apparel'.

On the other side, the industry group 'manufacture of paper and paper products' has shown the highest negative growth of (-) 15.4% followed by (-) 13.3% in 'manufacture of motor vehicles, trailers and semi-trailers' and (-) 10.9%  in 'printing and reproduction of recorded media', it added. 

August Retail Inflation at 10-Month High 

Retail inflation inched up to a 10-month high of 3.21% in August mainly due to higher prices of food items like meat and fish, vegetables and pulses, government data showed on Thursday.

However, retail inflation is still within the Reserve Bank's target range, thus keeping hopes of another rate cut alive.

Inflation based on the Consumer Price Index (CPI) stood at 3.15% in July and 3.69% in August 2018. The previous high was 3.38% in October 2018.

Inflation in the food basket was 2.99%, up from 2.36% in July.

The August data released by the National Statistics Office in the Ministry of Statistics and Programme Implementation also provided details of inflation in segments like 'health', 'recreation and amusement' and 'personal care and effects'.

The retail inflation in health was 7.84%, recreation and amusement 5.54% and personal care and effects 6.38%.

Price rise in the 'education' segment was recorded at 6.10% in August.

Inflation in meat and fish basket was 8.51%, pulses and products 6.94% and vegetables 6.9%.

The RBI, which mainly factors in CPI for arriving at its bi-monthly monetary policy, has been mandated by the government to ensure that inflation remains at 4%, with deviation of 2% on either side.

The central bank, which has already reduced the key policy rate four times in the current calendar year, is scheduled to announce its next bi-monthly monetary policy on October 4.

The data also revealed that highest rate of inflation was witnessed in Assam at 5.79%, followed by Karnataka (5.47%) and Uttrakhand (5.28%).

Interestingly, inflation was in the negative zone at (-) 0.42% in Chandigarh.

Inflation in rural areas of the country was at 2.18 % and 4.49% in the urban areas in August.