Industrial output moderates, inflation worrisome

Industrial output slowed down in June to 3.4 per cent though it remained in the positive territory for third month in a row, while retail inflation inched up marginally in July on account of costly vegetables.
Not worried over the moderation of IIP, India Inc expects that the steps taken by the government to revive growth will yield results.
According to the government data, factory output measured in term of Index of Industrial Production moderated to 3.4 per cent in June from 19 months high of 5 per cent recorded in the previous month mainly due to lower output of consumer goods.

On the other hand, retail inflation - based on Consumer Price Index - rose marginally to 7.96 per cent in July, from 7.46 per cent in June mainly due to higher prices of food items like vegetables, fruits, milk.
As regards IIP, the data revealed that manufacturing, mining and power sectors grew by 1.8 per cent, 4.3 per cent and 15.3 per cent respectively. Besides the output of capital goods recorded a growth of 23 per cent.
Overall, 15 of the 22 industry groups in manufacturing showed positive growth in June.

Commenting on the data, Ficci President Sidharth Birla said: "Sectors like consumer goods remain a cause of concern. We are hopeful that the steps taken by the government so far and measures announced in the Budget will help in further revival of the sector."

Output of consumer goods contracted by 10 per cent in June compared to the contraction of 1.5 per cent a year ago. For the April-June quarter, the segment has logged a contraction of 3.6 per cent, compared to a decline of 2.1 per cent in the same period of 2013-14.
The consumer durables segment declined by 23.4 per cent in June, as against a dip of 10.1 per cent a year ago. For April- June, it declined by 9.6 per cent as against a dip of 12.7 per cent in the first quarter of last fiscal.
Similarly, the consumer non-durable goods output grew at a meagre rate of 0.1 per cent in June compared to 6.2 per cent in same month last year. During April-June, the segment grew at 0.7 per cent compared to 7.1 per cent in same period last fiscal.