Inflation cools down, but industrial growth decelerates

India's annual retail inflation eased to a record low of 1.54 per cent during June, while the country's factory output growth also slowed to 1.7 per cent in May, official data showed on Wednesday.

As per data released by the Central Statistics Office (CSO) on Consumer Price Index (CPI), retail inflation was dragged lower by a sharp fall in prices of food items like pulses, vegetables and other perishables. The current inflation rate is the lowest since the series began in 2012.

The June retail inflation rate fell when compared with May, when it prevailed at a higher rate of 2.18 per cent. On a year-on-year (YoY) basis, the country's June retail inflation was lower from 5.77 per cent CPI rate reported for the corresponding month of last year.

The other key macro-economic data -- Index of Industrial Production (IIP) -- released by the CSO showed that on a sequential basis, the output rose slower than the revised estimates for April 2017.

The growth estimates for April 2017 were revised to 2.79 per cent from 3.1 per cent.

The factory output, as per the new IIP with revised base year of 2011-12, grew only by 1.7 per cent during May over the corresponding period of last year.

"The general index for the month of May 2017 stands at 124.3, which is 1.7 per cent higher as compared to the level in the month of May 2016. The cumulative growth for the period April-May 2017 over the corresponding period of the previous year stands at 2.3 percent," the CSO said in a statement.

"In terms of industries, 12 out of the 23 industry groups in the manufacturing sector have shown positive growth during the month of May 2017 as compared to the corresponding month of the previous year."

As per the IIP data released by the Central Statistics Office (CSO), May's slowdown was mainly on account of poor performance by the manufacturing sector, which has the maximum weightage in the overall index.

The manufacturing sector expanded by only 1.2 per cent, whereas mining output contracted by 0.9 per cent. In contrast, the other major sub-indices -- electricity generation -- expanded by 8.7 per cent during May.

Among the six big industry groups, the growth rates were 3.4 per cent in primary goods, 0.7 per cent in intermediate goods, 7.9 per cent in consumer non-durables and 0.1 percent in infrastructure or construction goods.

In contrast, the output of consumer durables declined by (-)4.5 per cent and was lower by (-)3.9 percent in capital goods.

As regards to inflation, data revealed that Consumer Food Price Index (CFPI) fell by (-)2.12 per cent in June from (-)1.05 per cent reported for May.

Item-wise, vegetable prices in June fell by (-)16.53 per cent, and pulses recorded a sharper drop of (-)21.92 per cent.

Food and beverages category during the month under review -- June -- recorded a marginal fall of (-)1.17per cent over the same month last year.

Among non-food categories, 'fuel and light' registered the highest inflation rate of 4.54 per cent in June.

While the rural CPI in June ruled higher at 1.59 per cent, retail inflation in urban areas was at 1.41 per cent.

--IANS

rv/dg