Drop in food prices eases inflation

Industrial output growth, meanwhile, remained subdued at 2.4 per cent, reports Tehelka Bureau

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Retail inflation, according to the latest government data, declined marginally to 2.05 per cent in January over the previous month on continued decline in food prices. Retail inflation based on the Consumer Price Index (CPI) for December 2018 has also been revised downward to 2.11 per cent from the earlier estimate of 2.19 per cent. The inflation was 5.07 per cent in January 2018.

The data released by the Central Statistics Office (CSO) further said the inflation in the ‘fuel and light’ category also fell to 2.2 per cent in January this year from 4.54 per cent in December 2018. The Reserve Bank of India, which reduced the key lending rate by 0.25 per cent last week, mainly factors in CPI-based inflation while arriving at its bi-monthly monetary policy. The central bank has revised downwards the retail inflation forecast to 2.8 per cent for the last quarter of the current fiscal on account of favourable factors including benign monsoon.

Industrial output growth, according to the CSO data, remained subdued at 2.4 per cent in December 2018 on account of contraction in the mining segment and poor show by the manufacturing sector. Factory output as measured in terms of the Index of Industrial Production (IIP) had grown by 7.3 per cent in December 2017.

The industrial growth for November 2018 was revised downwards to 0.3 per cent from the provisional estimate of 0.5 per cent released last month. During April-December 2018-19, industrial output grew at 4.6 per cent against 3.7 per cent in the same period of the previous fiscal.

The manufacturing sector, which constitutes 77.63 per cent of the index, recorded a low growth of 2.7 per cent in December as against 8.7 per cent expansion in the year-ago month. Mining sector production contracted by 1 per cent in December as against 1.2 per cent growth in December 2017.

The growth of the power sector output remained flat at 4.4 per cent in December 2018. Capital goods output grew at 5.9 per cent, compared to 13.2 per cent growth a year ago. Consumer durables output grew by 2.9 per cent as against a growth of 2.1 per cent in December 2017. Consumer non-durable goods growth was also low at 5.3 per cent in December 2018 as compared to 16.8 per cent growth in the year-ago month.

In terms of industries, 13 out of 23 industry groups in the manufacturing sector showed positive growth during December 2018. As per use-based classification, primary goods production declined by 1.2 per cent and intermediate goods by 1.5 per cent. Infrastructure/ construction goods grew at 10.1 per cent.

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