December factory output falls again, January inflation up 5.69 percent

New Delhi, Feb 12 (IANS) India’s factory output declined again in December by minus 1.3 percent while retail inflation climbed to 5.69 percent in January from 5.61 percent in the month before, official data showed on Friday. There was a growth of 3.6 percent in December 2014.

Although the December output growth continued to be in the negative as compared to 3.6 percent growth in December 2014, it was somewhat better than the minus 3.42 percent dip registered in the month before.

As per data on index of industrial production (IIP) released by the Central Statistics Office, the cumulative growth of the country’s factory output logged a 3.1 percent rise in the first nine months of the current fiscal as against 2.6 percent growth during the corresponding period of last fiscal.

December IIP was dragged lower by a minus 2.4 percent drop in manufacturing activity. Between the other broader indices, electricity production rose by 3.2 percent, while that for mining was up by 2.9 percent.

The cumulative growth of the electricity and mining indices for the first nine months of the current fiscal were 4.5 percent and 2.3 percent, respectively. Manufacturing’s cumulative growth stood at 3.1 percent.

In addition, the data revealed that among the six use-based classifications of the index, the output of consumer durables segment expanded by 16.5 percent in December. The consumer goods segment accelerated by 2.8 percent.

However, capital goods segment, which is a key indicator of economic activity plunged by minus 19.7 percent. The output of consumer non-durables was lower by minus 3.2 percent.

The basic and intermediate goods’ output inched-up by 0.5 percent and 0.9 percent, respectively.

Overall, only 10 out of the 22 industry groups in the manufacturing sector have shown negative growth during the month under review.

Segment-wise, growth was witnessed in ‘woollen carpets’ (184.1 percent), ‘telephone instruments including mobile phone and accessories’ (141.1 percent), ‘di-ammonium phosphate’ (46.8 percent), ‘wood furniture’ (36.9 percent), ‘commercial vehicles’ (28.7 percent) and ‘gems and jewellery’ (27.1 percent).

Moreover, high negative growth was reported in the ‘cable, rubber insulated’ (minus 85.2 percent), ‘heat exchanger’ (minus 68.8 percent), ‘cement machinery’ (minus 60.2 percent), ‘grinding wheels’ (minus 37.4 percent), ‘boilers’ (minus 22.7 percent) and ‘sponge iron’ (minus 22.5 percent).

Meanwhile, India’s retail inflation climbed to 5.69 percent in January from 5.61 percent in the month before, data on the consumer price index (CPI) showed on Friday.

Food inflation, or CFPI, during the month, ruled higher at 6.85 percent, as compared to 6.4 percent in December 2015, and at 6.14 percent in January 2015.

While rural retail inflation in January was at 6.48 percent, the urban CPI came in appreciably lower at 4.81 percent.

The retail inflation in January was mainly driven up by higher food costs. The inflation in food and beverages during the month was at 6.66 percent.

The Reserve Bank of India has set a 6 percent retail inflation target for January 2016. Presenting the first bi-monthly monetary policy statement for this fiscal in April last year, RBI Governor Raghuram Rajan had said CPI inflation would hover around 5 percent in the first half of the fiscal, and a little above 5.5 percent in the second half.

Reacting to the latest figures, India Inc. on Friday urged the government for delivering a growth-oriented budget for the forthcoming fiscal.

“Estimates of industrial production for the month of December 2015 mirrored the subdued industrial activity in the country and calls for urgent policy remedies,” industry chamber Assocham president Sunil Kanoria said in a statement here.

“Reasons for the sluggish industrial performance could be attributed to weak exports, slow investment, and weaker rural spending,” he said.

“Assocham feels that the Union Budget for 2016-17 must aim primarily at growth,” he added.

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