Industrial output drops sharply; retail inflation inches up

Dragged by poor manufacturing output, industrial production plunged to an over four-year low, contracting 3.2 per cent in November, while retail inflation inched up in December, a set of data which RBI will consider in its monetary policy review next month.
The Index of Industrial Production (IPP) had expanded by 5.2 per cent in November, 2014.
This is the worst performance since October 2011 when IIP had contracted by 4.7 per cent. The IIP data was released by by the Central Statistics Office (CSO) this evening.
The retail inflation measured on Consumer Price Index (CPI) increased marginally to 5.61 per cent in December, mainly on costlier vegetables and cereals. The retail inflation is on the rise for five consecutive months.

The CPI food inflation too rose to 6.40 per cent during the month, another government data showed.
Vegetables prices grew 4.63 per cent while prices of pulses jumped 45.92 per cent.

The IIP data revealed there was sharp decline in the manufacturing sector and as well as in capital goods.
The industrial production growth in October, however, was slightly revised upwards to 9.9 per cent from provisional estimates of 9.8 per cent released last month.
The manufacturing sector, which constitutes over 75 per cent of the index, contracted by 4.4 per cent in November as against a growth of 4.7 per cent in the same month last year.

Capital goods output, which is a barometer of investment, contracted by 24.4 per cent in November 2015 compared to a growth of 7 per cent in same month of previous year.
All eyes are now on RBI's February 2 monetary policy review. The industry also has lot of expectations from Finance Minister Arun Jaitley's Budget to be presented next month.
On IIP data, FICCI President Harshavardhan Neotia said it underlines the need for more measures to stimulate investments and deeper structural reforms.
During April-December this fiscal, industrial output grew
3.1 per cent compared with 2.6 per cent a year ago.

The manufacturing sector, which accounts for over 75 per cent of IIP, declined 2.4 per cent against a growth of 4.1 per cent in December 2014.
However, mining showed some improvement, growing 2.9 per cent in the month as against a contraction of 1.7 per cent in same month a year ago.
Power generation showed deceleration, growing at a clip of 3.2 per cent compared with 4.8 per cent in the same month a year ago.
As per the used-based classification, basic goods reported a marginal increase of 0.5 per cent as against 5.9 per cent in December 2014.
Consumer goods output rose to 2.8 per cent as against 0.6 per cent in December last fiscal.

Consumer durables, however, showed a robust growth of 16.5 per cent in December as against a contraction of 9.2 per cent during the same month last fiscal.
But the consumer non-durable segment showed a contraction of 3.2 per cent in December in comparison to a growth of 5.6 per cent in the previous fiscal.
In terms of industries, 10 out of the 22 industry groups in the manufacturing sector showed negative growth in December 2015 compared with the same month of the previous year.
The pace of retail price rise in January 2016 is the highest since 6.46 per cent in September 2014.

Food inflation quickened to 6.85 per cent in the first month of 2016, government data showed today.
Retail prices of 'cereals and products' inched up by 2.19 per cent in January, from 2.12 per cent in December 2015.
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According to official data, lower inflation in vegetables in August helped as the rate of price increase stood at a mere 1.02 per cent against 14.06 per cent in July.
Food and beverage prices remained sticky as these grew 5.83 per cent in August in comparison to 7.96 per cent in July.
However, the overall consumer food inflation in August fell to 5.91 per cent as against 8.35 per cent in July.

Pulses roiled the scene at an inflation print of 22.01 per cent against 27.53 per cent in July.
However, a majority of food items covered by the Ministry of Statistics and Programme Implementation (MOSPI) to measure retail inflation showed a firm trend during the month.
Elaborating on softening of retail inflation, Das said, "Last month, when the CPI number for July was released, which was 6.1 per cent, we had said the CPI inflation will moderate and come down."
He added: "This is on expected lines. The earlier rise of inflation was on account of rise in price of pulses and vegetables. Now there has been a significant moderation in pulses and vegetables. That mainly explains the inflation coming down to 5 per cent."

Das expects inflation level to remain in a moderate zone and may go down further, depending on pulses prices, which "we are expecting to come down even further".
As per the data, cereals and products turned costlier, with inflation at 4.11 per cent. The readings for eggs came in at 9.58 per cent, milk and products 4.36 per cent and oil and fat 4.94 per cent.
Among others, the rate of price rise in fruits came in at 4.46 per cent.
CPI inflation in August for the urban segment was 4.22 per cent while that of rural areas read 5.87 per cent.