Amid CAB outrage, India's factory output contracts by 3.8%

Dwindling manufacturing activity on the back of subdued demand conditions, contracted India's October factory output by (-) 3.8%.

However, the Index of Industrial Production (IIP) data suggested that downward production spiral has somewhat been arrested with October's output declining by (-)3.8% from (-)4.3% in September 2019.

On a year-on-year basis, the growth rate of factory output during the month under review was nowhere near the rise of 8.4% recorded during October 2018.

"The Quick Estimates of Index of Industrial Production (IIP) with base 2011-12 for the month of October 2019 stands at 127.7, which is 3.8% lower as compared to the level in the month of October 2018," the Ministry of Statistics & Programme Implementation said.

"The cumulative growth for the period April-October 2019 over the corresponding period of the previous year stands at 0.5%."

As per the data, the output rate of the manufacturing sector contracted by (-)2.1% in October from a YoY rise of 8.2%.

Similarly, the output of other notable sectors such as mining and electricity declined in the month under review. According to the data, mining activity declined by (-)8% from a YoY growth of 7.3% and the sub-index of electricity generation was lower by (-)12.2% from a rise of 10.8%.

In other news, a massive rise in food prices has lifted India's November's retail inflation to 5.54% from 4.62% in October, official data showed on Thursday.

On a year-on-year (YoY) basis, the Consumer Price Index (CPI) last month was higher than the corresponding period of last year when retail inflation stood at 2.33%.

According to the data furnished by the National Statistical Office (NSO), the Consumer Food Price Index (CFPI) inflated to 10.01% during the month under review from an expansion of 7.89% in October 2019 and (-) 2.61% rise reported for the corresponding period of last year.

The data assumes significance as the Reserve Bank in its latest monetary policy review maintained the key lending rates on account of rising retail inflation. Accordingly, the apex bank in the monetary policy statement predicted the CPI-based inflation to rise in the coming quarters.

Significantly, the data indicated that retail inflation level has breached the medium-term target for consumer price index (CPI) inflation of 4% with a band of +/- 2%.

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