Factory output rose to a six-month high of 3.4 per cent in April, primarily on account of mining and electricity output growth, data released by Ministry of Statistics and Programme Implementation (MoSPI) said.
Retail inflation, based on Consumer Price Index (Combined) climbed higher to a seven-month high of 3.05 in May on the back of rise in food inflation, separate set of data released by MoSPI showed.
The MoSPI revised up Index of Industrial Production (IIP) growth for March 2019 to 0.4 per cent from (-)0.1 per cent earlier. IIP growth had stood at 4.5 per cent in April last year. The previous high in IIP growth was recorded at 8.4 per cent in October 2018. Mining sector output grew at 5.1 per cent in April as against 3.8 per cent in the year-ago period, while the electricity output grew at 6 per cent in April 2019 as against 2.1 per cent in April 2018.
However, manufacturing output, which carries weight of 77.63 per cent in IIP, remained subdued with 2.8 per cent growth rate in April as against growth of 4.9 per cent in year-ago period and 0.1 per cent growth in March. After contracting for last three months, capital goods output, an indicator of investment activity, grew at 2.5 per cent in April as against 9.8 per cent in year-ago period.
Economists said fluctuations in industrial growth make it difficult to point to an industrial recovery. “On the whole, picture is not very encouraging on the industrial production front. Ind-Ra has been consistently articulating that given fluctuation in IIP growth data it is difficult to believe that we are on our way or anywhere near to a broad based and sustainable industrial recovery,” Sunil Kumar Sinha, principal economist, India Ratings & Research (Ind-Ra) said.
Sector-wise data showed that the growth in intermediate goods, after contracting for five consecutive months, grew at 1.0 per cent in April as against 0.4 per cent last year and (-)2.5 per cent in March 2019. Consumer durables output recorded growth of 2.4 per cent in April, slower than 3.9 per cent in the year-ago period, while consumer non-durables output grew 5.2 per cent in April from 7.5 per cent in April last year. The industry group, ‘manufacture of wearing apparel’, showed highest positive growth of 33.6 per cent, followed by 22.6 per cent in ‘manufacture of wood and products of wood and cork, except furniture’.
Meanwhile, retail inflation in May 2019 was the highest since October last when it had touched 3.38 per cent. Consumer Food Price Index (CFPI) inflation stood at 1.83 per cent in May as against 1.10 per cent in April. At 3.05 per cent, overall retail inflation rate is within the Reserve Bank’s inflation projection of 3.0-3.1 per cent for April-September 2019-20 from 2.9-3.0 per cent earlier, leaving scope for more rate cuts.
The ‘food and beverages’ segment registered an inflation of 2.06 per cent in May, with meat and fish recording inflation of 8.12 per cent. While fruits registered deflation of 5.17 per cent, vegetable inflation was recorded at a 11-month high of 5.46 per cent in May and pulses witnessed inflation after a gap of 29 months. Inflation for the ‘fuel and light’ category eased to 2.48 per cent in May from 2.56 per cent in April.
The RBI cut repo rate by 25 basis points in its bi-monthly review on June 6, changing its stance from neutral to accommodative but had stated impending risks to inflation.