Industrial Production Growth Slips To 1.7% In December Month-On-Month While Retail Inflation Jumps To 5.11% In New Series
New Delhi : Reflecting sluggishness in the economy, industrial production growth has slipped to 1.7 per cent in December month-on-month, while inflation rose to 5.11 per cent in January, raising demands for proactive steps in the forthcoming Budget to boost economic expansion.
Growth in factory output, as measured by the Index of Industrial Production (IIP), in the month under review was, however, higher as compared to December, 2013 when it expanded by 0.1 per cent. The November IIP of 3.8 per cent has been revised upwards to 3.9 per cent.
The Consumer Price Index (CPI), computed with a new base year of 2012, rose to 5.11 per cent in January month-on-month mainly due to dearer food and beverages items including fruits and vegetables. In December, retail inflation was at 4.28 per cent (recalculated with new base year). The same 5 per cent with 2010 as base year.
RBI Governor Raghuram Rajan had said last week that attaining the projected inflation target of six percent by January 2016 is at risk due to expected “food price shocks as the full effects of the monsoon’s passage unfold and from geo-political developments that could materialise rapidly”.
Last month, Reserve Bank had lowered the rate of interest by 0.25 per cent to 7.75 per cent after a gap of 20 months.
After releasing the new series of CPI with 2012 as base year and rejigging weight of different items and groups, Chief Statistician T C A Anant said: “Inflation in 2014-15 will be lower than the 2013-14 level.” He further said that besides changes in weight of items and groups “we have shifted to geometric mean for computing inflation from arithmetic mean used in previous series”.
food inflation at 6.13%
Food and beverages inflation in January was 6.13 per cent due to costlier fruits, vegetable and cereals. The rate of price rise in egg contracted by 0.24 per cent in January, while the same shot up to 9.38 per cent in milk and related products.
This is the second time in two weeks that CSO is taking markets by surprise. Last month, CSO introduced a new series on gross domestic product, which showed that the Indian economy grew much faster than earlier expected in the last three years.
The government also released Consumer Food Price Index (CFPI) or which stood at 6.06 per cent on annual basis at national level. The CFPI in urban areas was 6.96 per cent while it was 5.69 per cent in rural areas in January. Similarly, the retail inflation or CPI in urban and rural areas was 4.96 per cent and 5.25 per cent respectively.
The price rise in ‘pan, tobacco and intoxicants’ was 8.21 per cent while it was a low of 3.74 in the fuel and light segment.
Inflation dipped in case of sugar and confectionery as well as in transport and communication segments. The Central Statistics Office has been releasing CPI for Rural, Urban and Combined, at state/UTs and all India level, since January 2011. With this (base) revision, the gap between Price Reference Year (Base Year) and the Weight Reference Year has been minimised. Apart from base revision, a number of methodological improvements have been introduced in the revised series.
“The CPI for January at 5.11 percent in the new series of data is well below the expectations suggesting clearly the price situation is gliding path faster than the RBI expectations,” said Rana Kapoor, president of Assocham.
Composition of new series
In the new series, the weight of food and beverages and fuel and light has fallen marginally, while that of clothing and footwear has risen. The weight of food and beverages is 45.86 in the new 2012 series compared to 47.58 in 2010 series for national index. The weight of fuel and light segment is 6.84 in the new series as against 9.49 in the 2010 series.
The weight of clothing and footwear segment has been increased to 6.53 from 4.73 while that of housing is also hiked to 10.07 from 9.77.
On IIP front, manufacturing output, which constitutes over 75 per cent to the index, grew by 2.1 per cent in December compared to a dip of 1.1 per cent in the same month a year ago.
