IIP shows worst performance in 8-months, shrinks 2.4% in July

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Industrial production contracted by 2.4 per cent in July registering the worst performance in eight months mainly on account of declining output in manufacturing and capital goods sectors.

On cumulative basis, the factory output in April-July declined by 0.2 per cent compared to 3.5 per cent growth in the year-ago period.

The previous low was witnessed in November last year when the factory output shrunk by 3.4 per cent. Factory output, measured in terms of the Index of Industrial Production (IIP), had grown by 4.3 per cent in July last year.

Meanwhile, industrial production growth for June was revised downward to 1.95 per cent from 2.1 per cent provisional estimates released last month.

The official data released today showed that the manufacturing sector, that constitutes over 75 per cent of the IIP index, declined by 3.4 per cent in July compared to 4.8 per cent growth a year ago.

In terms of industries, 12 out of 22 industry groups in the manufacturing sector showed negative growth in July.

The capital goods output registered a steep decline of 29.6 per cent in the month against a growth rate of 10.1 per cent in last year.

Power generation recorded a growth of 1.6 per cent in July compared to 3.5 per cent in the same month a year ago.

The mining sector recorded a growth of 0.8 per cent in July against a growth of 1.3 per cent a year ago.

Growth in output of consumer durables decelerated to 5.9 per cent in July compared to 10.5 per cent a year ago. The consumer non-durable goods output declined by 1.7 per cent in July against 4.4 per cent contraction a year ago.

Overall, consumer goods production recorded a growth 1.3 per cent in July compared to 1.1 per cent a year ago.

As per use-based classification, the growth rates in July 2016 over July 2015 are 2 per cent in basic goods and 3.4 per cent in intermediate goods.

For the April-July period, manufacturing sector’s output showed contraction by 1.4 per cent, as against a growth of 4 per cent a year ago.

Production of capital goods, which are considered as barometer for investment, declined by 21.3 per cent in the four-month period compared to a growth of 4.2 per cent in year ago period.

Retail inflation eased to a five-month low of 5.05 per cent in August, mainly because of a slower rate of price increase in vegetables as well as food and beverages.

The rate of price growth, based on the consumer price index (CPI), was the lowest since March 2016 when it stood at 4.83 percent.

In the preceding month July, CPI inflation was at a nearly two-year high of 6.07 percent. In August 2015, the rate of price rise was 3.74 percent.

Lower inflation in vegetables in August helped as the rate of price rise stood at a mere 1.02 per cent against 14.06 percent in July, government data showed today.

Food and beverage prices remained sticky as they grew 5.83 per cent in August in comparison to 7.96 percent in July.

However, the overall consumer food inflation in August fell to 5.91 percent as against 8.35 per cent in July.

Pulses roiled the scene at an inflation print of 22.01 percent against 27.53 percent in July.

However, a majority of food items covered by the Ministry of Statistics and Programme Implementation (MOSPI) to measure retail inflation showed a firm trend during the month.

Cereals and products turned costlier, with inflation at 4.11 percent. The readings for eggs came in at 9.58 per cent, milk and products 4.36 per cent and oil and fat 4.94 percent.

Among others, the rate of price rise in fruits was at 4.46 percent.

CPI inflation in August for the urban segment was 4.22 percent while that of rural areas read 5.87 percent.

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