Industrial activity remains in the positive zone but barely so with the index of industrial production (IIP) rising a mere 0.5 per cent in July. This marks the second successive month when the IIP growth slowed after growing 4.7 per cent in May. Industrial output growth had slowed marginally to grow 3.4 per cent in June.
Although some estimates had anticipated a slowdown in growth, the official numbers have come below those projections.
The bad news is that capitals goods, a barometer of upcoming industrial activity, which had shown promise in the previous month growing a robust 23 per cent, shrunk again in July.
On the broad canvass, this means that industrial growth momentum is yet to catch pace and indeed is as good as flat, despite the positive business and investment sentiment which has buoyed the stock markets to new highs.
The indices of industrial production for mining, manufacturing and electricity sectors grew 2.1 per cent (4.3 per cent in June), (-) 1 per cent (1.8 per cent) and 11.7 per cent (15.7 per cent), respectively, in July.
This pulls down the overall cumulative industrial output growth for the first four months (April-July) to 3.3 per cent (3.9 per cent) against a decline of 0.1 per cent in the same period last year.
In terms of industries, 12 of the 22 industry groups in the manufacturing sector have shown positive growth during July 2014 compared with the corresponding month of the previous year.
In June, 15 of the 22 industry groups had reported growth while in May as many as 16 had grown.
As per use-based classification, July saw basic goods production rise 7.6 per cent (9 per cent in June), (-) 3.8 per cent in capital goods (23 per cent) and 2.6 per cent in Intermediate goods (2.7 per cent).
Consumer durables and consumer non-durables have recorded growth of (-) 20.9 per cent and 2.9 per cent respectively, with the overall growth in consumer goods being (-) 7.4 per cent against a decline of 10 per cent in the previous month.
At the same time, consumer inflation, now a key parameter dictating the monetary policy and thereby interest rates, recorded a moderate decline to 7.8 per cent in August against 7.96 per cent in July. However, it is still higher than the 7.46 per cent rise recorded in June, which would make the central bank wary of cutting interest rates any time soon.
This was due to high food prices, which has remained stubborn. Fruits, vegetable and milk & milk products particularly rose fast, which pushed up food inflation and thereby consumer inflation as a whole.
(Edited by Joby Puthuparampil Johnson)