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Industrial growth slows to 3.4% in June, consumer inflation rises again in July

12 August, 2014

Industrial activity remains in the positive zone but is yet to show momentum for a strong bounce back with the index of industrial production (IIP) rising 3.4 per cent in June, against a strong 4.7 per cent in the previous month. However, what’s heartening is the high growth in the capital goods production, a barometer of upcoming industrial activity.

The indices of industrial production for the mining, manufacturing and electricity sectors grew 4.3 per cent, 1.8 per cent and 15.7 per cent, respectively, in June. In the same month last year mining and manufacturing had declined while electricity output was flat.

This takes the overall cumulative growth for the first quarter (April-June) to 3.9 per cent against a decline of 1 per cent in Q1 FY14.

The cumulative growth in the three key sectoral sub indices during April-March 2013-14 over the corresponding period of 2012-13 was (-) 0.6 per cent, (-) 0.8 per cent and 6.1 per cent, respectively.

In terms of industries, 15 of the 22 industry groups in the manufacturing sector have shown positive growth during June 2014 compared with the corresponding month of the previous year. In May, 16 had grown while in April, 14 of these sectors had grown.

In terms of use-based classification, June saw basic goods production rising 9 per cent and intermediate goods up 2.7 per cent. But capital goods output grew a robust 23 per cent.

On the flip side consumer durables and consumer non-durables have recorded growth of (-) 23.4 per cent and 0.1 per cent respectively, with the overall consumer goods basket declining 10 per cent.

The consumer goods basket has earlier showed a rebound with 3.7 per cent growth in May after declining 5.1 per cent in April. 

Inflation

At the same time consumer inflation, now a key parameter dictating the monetary policy and thereby interest rates, rose to 7.96 per cent last month compared with a 7.46 per cent rise in June, which would make the central bank wary of cutting interest rates anytime soon.

Fruits and vegetable prices particularly rose fast which pushed up food inflation and thereby consumer inflation as a whole.

(Edited by Joby Puthuparampil Johnson)


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Industrial growth slows to 3.4% in June, consumer inflation rises again in July

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