FACTORY OUTPUT GROWS, RETAIL INFLATION EASES
NEWDELHI: India’s factory output unexpectedly expanded in January, while retail inflation eased in February amid fear that the Covid-19 outbreak could weigh in on the fragile economic recovery in Asia’s third-largest economy.
The National Statistical Office (NSO) on Thursday said the Index of Industrial Production (IIP) rose 2% in January compared with 0.1% growth a month ago, while retail inflation eased to 6.58% in February from 7.59% in the previous month. The decline in inflation could open up space for the Reserve Bank of India to provide monetary policy support to boost the economy.
The recovery in factory output was led by a pick-up in manufacturing activity, which grew at 1.5%, while electricity (3.1%) and mining (4.4%) also contributed to the revival.
The easing of retail inflation was led by softening of vegetable inflation to 31.6% in February from 50.2% in January. With the fall in Brent crude futures by 5.5% to $33.8 per barrel on Thursday, softening petrol and diesel prices could to put downward pressure on inflation in coming months.
NEWDELHI: Retail sales of passenger vehicles fell 1.17% year-onyear in February to 226,271 units, said the Federation of Automobile Dealers Associations (Fada) on Thursday, reflecting persistent unease in consumer sentiment and sluggish economic growth.
Manufacturers typically witness subdued sales in January and February after robust sales in December aided by heavy year-end discounts.
However, showroom sales of two-wheelers and commercial vehicles during the period increased due to heavy discounts on offer and marginal recovery in demand in rural areas. The industry witnessed a decline in showroom sales of passenger vehicles for three months in a row, after a marginal recovery in October and November when automakers offered record discounts to woo customers during the festive season.
Most manufacturers witnessed a decline in wholesales during the month as production was cut to control the inventory of BS-IV emission norm-compliant vehicles. In addition, dwindling spare part supplies from China due to the Novel Coronavirus outbreak impacted production of some automakers.
Two-wheeler manufacturers Hero Motocorp and TVS Motor Co. have already announced a 10% reduction in production in
MANUFACTURERS TYPICALLY WITNESS SUBDUED SALES IN JAN AND FEB AFTER ROBUST SALES IN DECEMBER AIDED BY HEAVY YEAR-END DISCOUNTS
February due to short supplies of components.
Data released by Maruti Suzuki India Ltd, Hyundai Motor India Ltd, Mahindra and Mahindra Ltd and Tata Motors Ltd showed total sales of 197,080 vehicles last month, a 12% drop from 224,241 units sold a year earlier.
According to Ashish Harsharaj Kale, president, Fada, despite reporting growth over the corresponding period, the overall retail sales were below expectations as the anticipated pre-buying for the BS-IV stocks was not seen. Many customers held back on purchases expecting lucrative deals towards end of March.
“February turned positive for retail sales for most of the segments as the entire auto ecosystem, especially the dealers have been focused on liquidation of their BS-IV stocks. With regards to inventory of passenger and commercial vehicles, stocks are at a reasonable level, but the challenge remains in liquidation of non-popular models as dealers look for adequate support for sales of such vehicles in March,” added Kale.