Recovery hopes recede as IIP growth slips to 0.5% in July

Dashing hopes of quick recovery, industrial output for July slowed to 4-month low growth rate of 0.5 per cent due to contraction in manufacturing and poor offtake of consumer goods, though retail inflation for August eased marginally to 7.8 per cent.
Factory output, as measured by the Index of Industrial Production, had grown by 2.6 per cent in July last year.
For the first four months of 2014-15 fiscal, IIP has recorded 3.3 per cent growth, as against a contraction of 0.1 per cent in the April-July period of 2013-14.
"The muted performance of industrial sector...Indicates that full fledged industrial recovery could still be some distance away. However, anecdotal evidence suggests some pick- up in new orders," CII Director General Chandrajit Banerjee said, adding that a sustained recovery would be indicated by an improvement in off-take of commercial credit.

Reserve Bank of India, which has maintained an hawkish stance on interest rate, is scheduled to announce the next monetary policy on September 30.
As per the IIP data, only 12 of the 22 industry groups in manufacturing showed positive growth in July.

The data on retail inflation suggested that easing prices of vegetables, cereals and petroleum products brought down retail inflation marginally to 7.8 per cent in August.
Consumer Price Index (CPI) based retail inflation was at 7.96 per cent in July. In August 2013, it was 9.52 per cent.
However, food inflation last month rose to 9.42 per cent over 9.36 per cent in July, an official release said today.

The rate of price rise in vegetables stood at 15.15 per cent in August, as against 16.88 per cent in July.