April IIP at 4.1%; May CPI inflation at 5.01%

Capital goods output surges to 11.1%; retail food inflation eased to 4.80%

The consumer price inflation edged up to 5.01% in May, while annual industrial output growth accelerated to a two-month high of 4.1% in April, according to the data released today by the Ministry of Statistics and Programme Implementation.

Index of Industrial Production (IIP)

The manufacturing sector output came in at 5.1% verus 2.2% on a month on month comparison. The capital goods output which has shown signs of betterment in the recent times came in at 11.1% versus 7.6% compared monthly.

In the broad categories, apart from manufacturing, mining registered a minor growth of 0.6% while electricity generation contracted 0.5% compared to 11.9% growth in the same month last year.

According to use-based classification, the growth rates in April 2015 over April 2014 are 2.8% in basic goods, 11.1% in capital goods, 3.3% in intermediate goods, 3.1% in consumer goods, 1.3% in consumer durables and 4.4% in consumer non-durables production.

In manufacturing, capital goods segment registered the maximum growth of 11.1%. The industry group machinery and equipment showed the highest growth of 20.6%, followed by 16.2% in wood and wooden products, the data indicated.

On the other hand, the industry group consisting of office, accounting and computing machinery witnessed the biggest contraction in April falling 36.5%, closely followed by 34% decline in production of radio and television sets and 26.7% in tobacco products.

Consumer Price Index (CPI)

The consumer price index-based inflation rose to a three-month high of 5.01%in May versus 4.87% in April. However,  retail food inflation eased a little bit to 4.80% from 5.11% in April.  In a year ago  period, it had stood at 8.89%.

The food inflation was higher in the urban areas at 4.84% against 4.74% in the rural parts, the situation was quite opposite in case of the combined inflation. Overall inflation stood at 5.52% in villages and 4.41% in the urban areas.

A Prasanna, economist, ICICI Securities Primary Dealership Ltd, Mumbai, said both the IIP (industrial output) and CPI data augur well for the economy.

"The higher-than-expected IIP data corroborates with the solid indirect tax growth figures released by the Finance Ministry. The CPI data is better than what we expected. The last two readings have shown that food prices are not flaring up despite adverse weather conditions. This bodes well given the outlook for uneven monsoon distribution. Should CPI and food inflation continue to behave on similar lines January 2016 inflation may undershoot RBI's 6% estimate. While we still do not expect RBI to cut rates anytime soon, this data has increased the odds for a rate move later in the calendar year."