Retail inflation drops, but so does factory output (Roundup)

Industry's pitch for rate cuts and economic reforms has become sharper, with factory output slipping further to log a 4.2 percent drop in October even as retail inflation eased further to a historic low of 4.38 percent in November, official data showed Friday.

Of most concern in the data released on Index of Industrial Production (IIP) was a 7.6 percent decline in manufacturing output that industry has been warning against, while calling upon the Reserve Bank of India (RBI) to cut interest rates and the government to push reforms.

The manufacturing sector has a weight of more than 75 percent in the general index for industrial production, and unless steps are taken to revive this sector, the overall performance of Indian industry will continue to be sluggish, experts warned.

Industry body Confederation of Indian Industry (CII) said the slump in IIP comes even as substantial efforts have been made by the government to ensure a recovery in the economy.

"Actions are already very visible and results are on the ground. Industry is also positive about additional investments. All this can now be complemented by a reduction in interest rate by RBI," Chandrajit Banerjee, director general, CII said.

Meanwhile, the Federation of Indian Chambers of Commerce and Industry (FICCI) said the fall in manufacturing growth in October is disturbing, more so because it is broad-based and not limited to a few sectors.

"It not only reflects slowdown in investments but also the deep rooted slackness in consumer demand which requires bringing down the interest rates urgently. It would also need faster implementation of government's intentions to introduce reforms in which states have major role to play," said Sidharth Birla, president, FICCI.

In the case of retail inflation, as measured by the consumer price index, it has successively dipped from 11.16 percent in November last year and 5.52 percent in October, which the industry feels should be a factor of much comfort for the central bank to look at rate cuts soon -- more so, since the inflation for food items is even lower at 3.14 percent.

Consumer price index-based inflation, meanwhile, eased to a record low of 4.38 percent during November -- from 11.16 percent during the corresponding month last year -- on the back of lower food prices.

The retail inflation rate recorded is the lowest since India started computing consumer price index (CPI) in January 2012. The retail inflation eased for the fourth straight month in November.

The retail inflation stood at 5.52 percent in October 2014.

The urban inflation in November stood at 4.69 percent and the rural inflation at 4.09 percent.

Consumer food price inflation eased to 3.14 percent in November from 5.59 percent in October.