IIP grows to 7.1% in Dec; retail inflation eases to 5.07% in Jan

As the recovery momentum is seen in some key segments, industrial output grew by 7.1 per cent in the December month on the back of robust performance by sectors such as manufacturing, capital goods and non-durable consumer goods.

Similarly, country's retail inflation also declined to 5.07 per cent in January marginally, due to easing prices of vegetables, fruits and fuel components, according to a Government official data released on Monday.

With the data, India Inc, however, feels that the country’s economic situation will remain under pressure in the near future due to global factors. “Risks to the Indian economy continue to prevail in the forms of continued uncertainties in the global environment due to geo-political situations, including rising global protectionism could further delay a meaningful recovery of external demand,” said ASSOCHAM President Sandeep Jajodia.

Principal Economist with ICRA Aditi Nayar also opined that it remains ‘somewhat premature’ to attribute the recent double-digit growth in capital goods to a pickup in investment activity.

The Index of Industrial Production or IIP had grown at 2.4 per cent in December 2016, while for the month of November, 2017, it was revised upwards to 8.8 per cent from provisional estimates of 8.4 per cent released last month.

“The IIP growth in December was mainly on account of uptick in manufacturing sector which constitutes 77.63 per cent of the index,” the data released by the Central Statistics Office (CSO) showed, adding that it also grew by 8.4 per cent during the month as compared to just 0.6 per cent in December 2016.

“The capital goods, a barometer of investments, showed a sharp increase in output by 16.4 per cent in December, 2017 as against a decline of 6.2 per cent year ago. The consumer non-durables, which are mainly fast moving consumer goods, too showed an increase of 16.5 per cent as against contraction of 0.2 per cent,” it said.

As far as retail inflation is concerned, it also little cheered the common man by declining to marginal 5.07 per cent in January. The fall was mainly due to easing prices of vegetables, fruits and fuel components.

Based on Consumer price index (CPI), the inflation was at 5.21 per cent in December — a 17-month high, and 3.17 per cent in January last year. The data also showed that the rate of price rise for consumer foods eased to 4.7 per cent in January, from 4.96 per cent in December.

“Inflation in the vegetable basket slowed to 26.97 per cent as against 29.13 in December. Prices of fruits too rose at a slower pace of 6.24 per cent last month, as against 6.63 per cent recorded in the preceding month,” it said.