India's factory output rises, so does inflation

High food prices pushed up India's annual retail inflation marginally to 5.77 per cent in May, even as the country's facory output rose marginally by 1.2 per cent in June against a fall of 1.3 per cent in the month before, official data showed on Tuesday.

As per data released by the Central Statistics Office (CSO) on Consumer Price Index (CPI), the annual food inflation for June moved up to 7.79 per cent against 7.47 per cent in May. In urban India, the annual food inflation was 8.16 per cent, against 7.61 per cent in rural areas.

What has also continued to hit people hard is high prices of pulses. The annual inflation for this category was as much as 26.86 per cent. The similar annual inflation for vegetables was 14.74 per cent, while that for sugar was 16.79 per cent.

As regards the numbers on Index of Industrial Production (IIP), what should come as some respite is the marginal rise of 0.7 per cent in the manufacturing index during the month under review. May had seen manufacturing index fall by 3.7 per cent.

Otherwise, the other two major sub-indices -- those for mining and electricity -- also rose by 1.3 per cent and 4.7 per cent respectively. In April, though, the growth was lower at 1.1 per cent for mining, but significantly higher at 14.6 per cent for electricity.

"In terms of industries, 14 out of the 22 industry groups in the manufacturing sector have shown a positive growth during the month of May as compared to the corresponding month of the previous year," an official statement said.

In the past six months, the general index has taken a drop on three occasions. October was the last month when there was a significant growth, with the general index rising by 9.87 per cent, surprising stakeholders.

Among the six big industry groups, the growth rates were 3.9 per cent in Basic goods, (-)12.4 per cent in capital goods and 3.6 percent in intermediate goods 6 per cent in consumer durables (-)2.2 per cent in consumer non-durables and 1.1 percent in overall consumer goods.

As regards inflation, data also showed some major regional biases. The overall annual inflation rate was as high as 8.45 per cent in Orisha, it was distinctly lower at 3.63 per cent in Himachal Pradesh.

In terms of rural areas, Gujarat had the higher annual inflation of 8.91 per cent, while the lowest was 3.25 per cent in Assam. Among the urban areas, Telangana topped with 7.83 per cent, even as the lowest was 2.91 per cent in Jammu and Kashmir.

Reacting to factory output numbers, Assocham said as one month of decline is followed by another month of decline, the revival is fragile. The chamber asked policymakers to particularly address the structural issues, like mounting bank losses and limited availability of capital.

In a similar vein, Ficci said the slow growth in manufacturing remains a concern. "Weak consumer and investment demand points to the fact that recovery is going to be slow in manufacturing and the need for addressing the more deep rooted structural issues."

--IANS

ap/mr