Retail inflation slips while Nov factory output zooms 8 percent

Last Updated: Fri, Jan 12, 2018 19:55 hrs
FILE PHOTO: A worker moves a roll of steel using a remote control inside the China Steel Corporation factory in Kaohsiung

New Delhi An exponential rise in the manufacturing output lifted India's factory production by over 8% in November from a rise of 1.99% in October and a 5.1% growth during the corresponding period of 2016-17.

As per the data released by the Central Statistics Office (CSO) on Friday, the acceleration in factory output was mainly on account of a robust performance by the manufacturing sector.

On a year-on-year basis, the manufacturing sector expanded by 10.2%, while mining sector's output inched up by 1.1% and the sub-index of electricity generation increased by 3.9%.

"The general Index for the month of November 2017 stands at 125.6, which is 8.4% higher as compared to the level in the month of November 2016," the CSO report on the "Quick Estimates" of Index of Industrial Production (IIP) for November said.

"The cumulative growth for the period April-November 2017 over the corresponding period of the previous year stands at 3.2%."

Among the six use-based classification groups, the output of primary goods which has the highest weightage of 34.04 grew by 3.2%. The output of intermediate goods which has the second highest weightage rose by 5.5%.

Similarly, consumer non-durables's output edged-higher. It rose by 23.1%, and that of consumer durables by 2.5%. In addition, infrastructure or construction goods' output increased by 13.5% and that of capital goods by 9.4%.

"In terms of industries, fifteen out of the twenty three industry groups in the manufacturing sector have shown positive growth during the month of November 2017 as compared to the corresponding month of the previous year," the CSO said.

According to the data, the industry group 'manufacture of pharmaceuticals, medicinal, chemical and botanical products' has shown the highest positive growth of 39.5% followed by 29.1% in 'manufacture of computer, electronic and optical products' and 22.6% in 'manufacture of other transport equipment'.

On the other hand, the industry group 'other manufacturing' has shown the highest negative growth of (-)15.9% followed by (-)13.1% in 'manufacture of wearing apparel' and (-)11.2% in 'manufacture of electrical equipment'.

While retail inflation shoots to 5.21%. Continuing rise in food and fuel prices pushed India's annual retail inflation rate over the five% mark in December, official data showed on Friday.

On a year-on-year (YoY) basis, the CPI inflation last month was higher than the 3.41% recorded in December 2016. The Consumer food price index (CFPI) in December stood at 4.96% compared to the 4.42% of November 2017.

AN EXPECTED RETAIL TICK

Commenting on India's retail inflation, which grew at 5.2 percent in December, Credit rating agency ICRA on Friday said that the extent of the uptick in IIP growth in November 2017 was far sharper than expected.

"Our expectation (5.7%), reflecting a favourable base effect as well as inventory rebuilding after the festive season, raising some concerns regarding its sustainability beyond Q3 Fy2018," said Aditi Nayar, Principal Economist at ICRA.

"The disaggregated data poses a mixed trend with high growth in consumer non durables, infra/construction goods and capital goods offset by modest expansion in basic goods, intermediate goods and consumer durables," she added.

However, she said that nevertheless, all the six sub-sectors recorded an improving trend on a sequential basis, which is encouraging.

The continued divergence between the growth of consumer durables and non durables clouds an assessment of the strength of the pickup in end-user demand.

The uptick in the growth of infrastructure/construction goods to a 56 month high benefitted from the double-digit expansion in steel and cement output.

"Manufacturing growth is expected to remain robust in December 2017, benefiting from a favourable base effect, as well as the robust expansion displayed by sectors such as automobiles. However, the subdued performance of electricity generation and the output of Coal India Limited may weigh upon the growth of mining and electricity in December 2017," added Nayar while giving an outlook going forward. 

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