Retail inflation eases marginally; Factory output grows at 2.6%

Retail inflation eased slightly to 9.52 per cent in August over the previous month following softening in prices of almost all commodities, except vegetables.

The retail inflation measured on the Consumer Price Index (CPI) was at 9.64 per cent in July.

The CPI inflation has been showing signs of softening since March, expect for June when it inched up marginally.

As per the government data, inflation in the food and beverages segment eased to 11.06 per cent in August as against 11.24 per cent in the previous month.

However, there was no reprieve in vegetable prices as they increased by 26.48 per cent as against inflation of 16.4 per cent in July. Though there was softening in the prices of fruits in August month-on-month.

Inflation in milk and milk products, clothing, bedding and footwear segments also softened month on month.

The decline in retail inflation comes days ahead of the Reserve Bank's mid-quarter monetary policy review on September 20. The central bank keeps a close watch on the inflation data to decide its monetary policy.

The data further revealed that retail inflation rates for rural and urban areas in August stood at 8.93 per cent and 10.32 per cent, respectively.

For CPI inflation, price data are collected from selected towns by NSSO and from selected villages by the Department of Posts.

After contracting for two straight months, industrial production entered the positive zone in July, recording a growth of 2.6 per cent on account of improved performance of manufacturing and power sectors.

Factory output measured in terms of the Index of Industrial Production (IIP) had contracted 0.1 per cent in July last year, as per the data released by Central Statistical Organisation today.

Meanwhile, IIP for June was revised upwards to a decline of 1.78 per cent from a provisional 2.2 per cent dip in production. It contracted by 2.8 per cent in May this year.

During April-July this year, factory output contraction remained flat at 0.2 per cent.

The manufacturing sector, which constitutes over 75 per cent of the index, grew by 3 per cent in July compared to zero growth in the month a year earlier. During April-July, the sector saw a decline of 0.2 per cent compared with a contraction of 0.6 per cent in the period last year.

Power generation increased by 5.2 per cent in July as against a growth of 2.8 per cent in same month in 2012. Power generation in the April-July grew 3.9 per cent compared with an expansion of 5.5 per cent in same period last year.

Output of capital goods, a barometer of demand, grew by 15.6 per cent in July compared with a decline of 5.8 per cent in the same month a year earlier. During April-July, capital goods production grew 1.8 per cent compared with a production drop of 16.8 per cent in same period last year.

Meanwhile, the mining output declined 2.3 per cent in July, compared with a dip of 3.5 per cent. In April-July, the sector declined 4 per cent compared with a contraction of 2 per cent in the corresponding period.

Among the 22 industry groups in the manufacturing sector, 11 recorded positive growth in July.

Consumer goods output contracted 0.9 per cent in July, compared with expansion of 0.7 per cent in the same month last year. Production of these goods declined 2 per cent in April-July compared with growth of 3.1 per cent in the same period of 2012.

The decline in output of consumer durables stood at 9.3 per cent in July, from a growth of 0.8 per cent previously. The segment saw a 12 per cent decline in output in April-July compared with growth of 6.1 per cent.

Consumer non-durables output expanded 6.8 per cent in July against a contraction of 0.6 per cent a year earlier. The segment grew 6.8 per cent in April-July compared with growth of 0.6 per cent.

Growth in intermediate goods production was at 2.4 per cent in July as against 0.1 per cent a year ago. For April-July, the segment's expansion was 1.8 per cent compared with 0.6 per cent in the same period a year ago.

Basic goods output grew by 1.7 per cent in July from a growth of one per cent in July 2012. Production of these goods grew by 0.2 per cent in April-July compared with growth of 2.7 per cent a year earlier.

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