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IIP slips to 3.1 per cent in May, Retail inflation hits high
India’s industrial output growth slipped to 3.1 per cent in May mainly on account of subdued performance of mining and manufacturing sector, according to government data released Friday.
The Index of Industrial Production (IIP) had expanded by 3.8 per cent in May 2018. The index grew at 4.3 per cent in April and 0.4 per cent in March this year.
The expansion in the mining sector was merely 3.2 per cent in May, as compared to 5.8 per cent in the year-ago month.
Similarly, the growth in the manufacturing sector was also subdued at 2.5 per cent in May, compared to 3.6 per cent in the corresponding month of the last fiscal.
However, the power generation grew at 7.4 per cent in May, against 4.2 per cent in same month last year.
As per Central Statistics Office (CSO) data, the capital goods output, which is a barometer of investment, grew at 0.8 per cent compared to 6.4 per cent in May last year.
As per use-based classification, the growth rates in May 2019 over the same month last year are 2.5 per cent in primary goods, 0.6 per cent in intermediate goods and 5.5 per cent in infrastructure/ construction goods.
The consumer durables and consumer non-durables have recorded growth of (-) 0.1 per cent and 7.7 per cent, respectively.
In terms of industries, 12 out of the 23 industry groups in the manufacturing sector have shown positive growth in May over the same month last year.
The industry group ‘Manufacture of wood and products of wood and cork, except furniture; manufacture of articles of straw and plaiting materials’ have shown the highest positive growth of 24.8 per cent followed by 15.9 per cent in ‘Manufacture of food products’ and 9.4 per cent in ‘Manufacture of computer, electronic and optical products’.
On the other hand, the industry group ‘Manufacture of paper and paper products’ has shown the highest negative growth of (-) 12.2 per cent followed by (-) 9.9 per cent in ‘Manufacture of furniture’ and (-) 8.7 per cent in ‘Manufacture of fabricated metal products, except machinery and equipment’. Core consumer inflation, which strips out food and fuel prices, was estimated at an annual 4.09-4.11% in June, marginally lower than May’s 4.1-4.2%, according to three analysts after seeing the inflation figures released on Friday.
“Food inflation trend is upwards while core is downwards, so the overall outlook on inflation is benign. The RBI will continue to maintain its accommodative stance and could do another 25-50 basis points rate cuts in this financial year,” said Sujan Hajra, chief economist at Anand Rathi Securities.
Inflation has come down sharply from a peak of more than 12% in 2013, and was below the Reserve Bank of India’s (RBI) 4% target for the eleventh consecutive month.