Factory output growth slips to 7-month low of 3.2% in May.

New Delhi : Retail inflation spiked to a five-month high of 5 per cent in June on costlier fuel, despite easing food prices, reducing possibilities of an interest rate cut by the Reserve Bank of India (RBI) in its upcoming monetary policy review.

The retail inflation based on Consumer Price Index (CPI) stood at 4.87 per cent in May. It was 1.46 per cent in June 2017. The earlier high was in January this year at 5.07 per cent.

Another data showed industrial production growth slipped to a seven-month low of 3.2 per cent in May mainly due sluggish performance of manufacturing and power sectors coupled with poor offtake of fast moving consumer goods (FMCG).  Factory output growth measured in terms of the Index of Industrial Production (IIP) was revised down to 4.8 per cent in April from previous estimates of 4.9 per cent, according to the data released by the Central Statistics Office (CSO) on Thursday.

As per the data released by the Central Statistics Office (CSO), the inflation in the food basket was 2.91 per cent, compared to 3.1 per cent in May, due to slower rate of price rise articles such as fruits, vegetables and cereals. The inflation in fuel and light category, however, went up to 7.14 per cent as against 5.8 per cent in May. The CSO said the price data for CPI inflation were collected from selected towns by the Field Operations Division of NSSO (National Sample Survey Office) and from selected villages by the Department of Posts.

The data further showed that inflation in clothing and footwear category in June stood at 5.67 per cent and in housing 8.45 per cent, both marginally higher over previous month. The government has mandated the RBI to keep inflation at 4 per cent (+/- 2 per cent). The RBI Governor headed Monetary Policy Committee (MPC) will be meeting later this month to review interest rate regime.

The IIP had expanded by 2.9 per cent in May last year. The previous low of industrial production growth was 1.8 per cent in October 2017.

During April-May this fiscal, the IIP recorded a growth of 4.4 per cent as compared to 3.1 per cent in same period year ago. The manufacturing sector, which constitutes 77.63 per cent of the index, grew by just 2.8 per cent in May, marginally up from 2.6 per cent in the corresponding period last year. Power generation growth decelerated sharply to 4.2 per cent during the month as compared to a high of 8.3 per cent year ago.

The mining sector output recorded an impressive growth of 5.7 per cent in May as against 0.3 per cent in May last year.

The FMCG sector was the worst performer among the user based goods segment, as its output declined by 2.6 per cent as against a growth of 9.7 per cent year ago.  As per use-based classification, the growth rates in May 2018 over May 2017 are 5.7 per cent in primary goods, 7.6 per cent in capital goods, 0.9 per cent in intermediate goods and 4.9 per cent in infrastructure/construction goods. The consumer durables and have recorded growth of 4.3 per cent in the month under review.

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