Factory growth shoots up
Industrial output expanded to an eight-month high of 4.3 per cent in July, beating analyst estimates of 2.3 per cent growth for the month, driven by higher output in manufacturing, mining and consumer non-durables.
However, higher food prices pushed up retail inflation to a 10-month high of 3.21 per cent in August, government data showed on Thursday.
As the price rise is within the central bank’s comfort zone there could be another round of rate cuts by the Reserve Bank of India in October.
Manufacturing grew at its highest rate this fiscal in July at 4.2 per cent against 1.2 per cent in June, 2.5 per cent in May and 2.8 per cent in April.
Consumer non-durables also fared well, gradually inching towards the double digits. Non-durables grew 8.3 per cent in July, 7.8 per cent in June, 7.7 per cent in May and a much lower 5.2 per cent in April.
The economy expanded at its slowest pace in more than six years at 5 per cent in the first quarter of the fiscal and slowed for the sixth straight quarter, prompting the government to announce a series of measures. This is the 13th month in a row for a sub-4 per cent retail inflation figure.
IIP grew 2 per cent in June and 3.1 per cent in May this year. Factory growth in July 2018 was recorded at 6.5 per cent.
Thirteen of the 23 manufacturing industry groups saw a growth in output in July. Mining rose 4.9 per cent compared with 1.6 per cent in June.
However, consumer durables output shrank 2.7 per cent, while capital goods output contracted 7.1 per cent in July compared with a 6.5 per cent contraction in the previous month.
Intermediate goods output grew 13.9 per cent compared with a 12.4 per cent growth in June. Primary goods output rose 3.5 per cent in July compared with a 0.5 per cent fall in the previous month.
Food prices rise
Higher prices of food items such as meat and fish, vegetables and pulses pushed up retail inflation to a 10-month high of 3.21 per cent in August.
Inflation based on the consumer price index stood at 3.15 per cent in July and 3.69 per cent in August 2018. The previous high was 3.38 per cent in October 2018. Inflation in the food basket was 2.99 per cent, up from 2.36 per cent in July. Inflation in the meat and fish basket was 8.51 per cent, pulses and products 6.94 per cent and vegetables 6.9 per cent.