The Free Press Journal

Retail inflation hits 5-month high, IIP growth remains weak

The August inflation number is the highest since March 2017, when it was recorded at 3.89 per cent. Overall food inflation in August also moved up, reversing the deflationa­ry trend, to 1.52 per cent

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Retail inflation rose to a five- month high of 3.36 per cent in August due to costlier vegetables and fruits. The consumer price index (CPI) based inflation stood at 2.36 per cent in the previous month. The August inflation number is the highest since March 2017, when it was recorded at 3.89 per cent. Overall food inflation in August also moved up, reversing the deflationa­ry trend, to 1.52 per cent, government data showed Tuesday. Daily consumable­s like fruits and vegetables turned costlier during the month with inflation print coming at 5.29 per cent and 6.16 per cent, respective­ly as against 2.83 per cent and (-)3.57 per cent in July, according to the data released by the Central Statistics Office (CSO).

Likewise, prepared meals, snacks and sweets as a category turned dearer with the rate of price rise at 1.96 per cent from 0.43 per cent in July. Also, transport and communicat­ion means were costlier during the month with inflation rising to 3.71 per cent from 1.76 per cent in July. However, items such as cereals and products, meat and fish, oils and fats became cheaper at inflation prints at 3.87 per cent, 2.94 per cent and 1.03 per cent, respective­ly.

Manufactur­ing drags down IIP growth to 1.2% in July Industrial production grew a meagre 1.2 per cent in July from 4.5 per cent a year ago, bearing the brunt of a dismal show of the manufactur­ing sector — especially that of capital goods — putting pressure on RBI to lower rates further. Factory output measured in terms of index of industrial production had declined by 0.2 per cent in June, according to revised estimates released by the Central Statistics Office (CSO) Tuesday. During April-July, IIP grew by 1.7 per cent, down from 6.5 per cent in the same period last year. Growth of the manufactur­ing sector, which makes up 77.6 per cent of the index, decelerate­d sharply to 0.1 per cent in July compared to 5.3 per cent in the same period of 2016. Output of capital goods — a proxy for infrastruc­ture investment­s in the country — contracted 1 per cent in July as against a growth of 8.8 per cent in the year-ago period.

Consumer durable goods met with similar fate, with production declining 1.3 per cent as against a nominal growth of 0.2 per cent a year earlier. However, electricit­y generation stood out as it posted a growth of 6.5 per cent in July, up from 2.1 per cent in July 2016. Mining output too expanded by 4.8 per cent, as against 0.9 per cent in the year-ago month.

In terms of use-based classifica­tion, growth rates in July 2017 over the same month last year stood at 2.3 per cent for primary goods, (-)1.8 per cent for intermedia­te goods and 3.7 per cent for infrastruc­ture and constructi­on goods. Consumer non-durables have recorded a growth of 3.4 per cent. A total of eight out of 23 industry groups in the manufactur­ing sector grew in July 2017 compared to the correspond­ing month last year.

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