Driven by costlier food items, retail inflation inched up to 10-month high of 3.21 per cent in August but remained within the RBI’s comfort level and may prompt the central bank for one more round of rate cut as another set of government data revealed industrial production growth slowed to 4.3 per cent in July.
Inflation in the food basket was 2.99 pc, up from 2.36 pc 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 pc, recreation and amusement 5.54 pc and personal care and effects 6.38 pc.
Price rise in the ‘education’ segment was recorded at 6.10 pc in August. Inflation in meat and fish basket was 8.51 pc, pulses and products 6.94 pc and vegetables 6.9 pc. 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 pc, with deviation of 2 pc 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 pc, followed by Karnataka (5.47 pc) and Uttarakhand (5.28 pc). Interestingly, inflation was in the negative zone at (-) 0.42 pc in Chandigarh. Inflation in rural areas of the country was at 2.18 pc and 4.49 pc in the urban areas in August.
Industrial output growth drops to 4.3 pc in July
Industrial output grew at 3.3 pc in April-July period this fiscal, down from 5.4 pc growth in the same period a year ago.
The IIP data showed a significant slowdown in the manufacturing sector, which grew at 4.2 pc in July 2019 as compared to 7 pc a year ago.
Capital goods segment, which is a barometer of investment, saw a contraction of 7.1 pc in July compared to 2.3 pc rise a year ago. Mining growth was 4.9 pc in July as compared to 3.4 pc in the same month last fiscal.
The expansion in the power generation sector stood at 4.8 pc in July, compared to 6.6 pc a year earlier. As per use-based classification, the growth rates in July 2019 over July 2018 are 3.5 pc in primary goods, 13.9 pc in intermediate goods and 2.1 pc in infrastructure/construction goods.