Industrial output rebounds, inflation eases

IIP expands 2% in January; CPI inflation eases to 6.58% in February
Poor show by manufacturing remains a concern despite improved show by mining and electricity sectors.

India’s industrial output expanded 2% in January compared with a contraction of 0.3% in December despite subdued performance of manufacturing sector, according to the government data released on Thursday. The cumulative growth for the 10 months of the current financial year (April-January) was 0.5%.

The sectoral indices of for mining, manufacturing and electricity grew by 4.4%, 1.5% and 3.1% respectively in January. The cumulative expansion of these sectors for the April-January period were 1%, 0.3% and 0.9% respectively.

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Eleven out of the 23 industrial groups in the manufacturing sector grew in January 2020 as compared to the same month of 2019. Tobacco products recorded the highest growth of 22.8%, while basic metals grew 14.1%, and furniture 9%. Printing and reproduction of recorded media, computer, electronic and optical products and motor vehicles were the worst performers in January.

Production of primary good grew 1.8% and intermediate goods at 15.8%, while capital goods contracted 4.3% and infrastructure shrank 2.2%. Consumer durables and consumer non-durables recorded growth rates of (-) 4% and (-) 0.3% respectively.

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Retail inflation measured in terms of consumer price index eased to 6.58% in February compared with the previous month on the back of easing food prices, according to the data released by the National Statistical Office. The retail inflation was 7.59% in January.

The inflation for food items eased to 10.81% in February 2020, compared with 13.63 per cent in January. Despite the easing this month, the retail inflation is way above the Reserve Bank of India’s comfort level of 4%.

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