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Industrial output drops sharply; retail inflation inches up

Published On : 13 Jan 2016

New Delhi, (PTI) Dragged by poor manufacturing output, industrial production plunged to an over four-year low, contracting 3.2 per cent in November, while retail inflation inched up in December, a set of data which RBI will consider in its monetary policy review next month.

The Index of Industrial Production (IPP) had expanded by 5.2 per cent in November, 2014.

This is the worst performance since October 2011 when IIP had contracted by 4.7 per cent. The IIP data was released by by the Central Statistics Office (CSO) this evening.

The retail inflation measured on Consumer Price Index (CPI) increased marginally to 5.61 per cent in December, mainly on costlier vegetables and cereals. The retail inflation is on the rise for five consecutive months.

The CPI food inflation too rose to 6.40 per cent during the month, another government data showed.

Vegetables prices grew 4.63 per cent while prices of pulses jumped 45.92 per cent.

The IIP data revealed there was sharp decline in the manufacturing sector and as well as in capital goods.

The industrial production growth in October, however, was slightly revised upwards to 9.9 per cent from provisional estimates of 9.8 per cent released last month.

The manufacturing sector, which constitutes over 75 per cent of the index, contracted by 4.4 per cent in November as against a growth of 4.7 per cent in the same month last year.

Capital goods output, which is a barometer of investment, contracted by 24.4 per cent in November 2015 compared to a growth of 7 per cent in same month of previous year.

All eyes are now on RBI's February 2 monetary policy review. The industry also has lot of expectations from Finance Minister Arun Jaitley's Budget to be presented next month.

On IIP data, FICCI President Harshavardhan Neotia said it underlines the need for more measures to stimulate investments and deeper structural reforms.

On CPI data, Richa Gupta, Senior Director of Deloitte India said: "...RBI action on the rates front is unlikely anytime soon and would be contingent on the government s expenditure plans over the next one year". .

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