November IIP growth rises to 19-month high of 8.4%, retail inflation surges to 5.21% in December
Home Â» Politics November IIP growth rises to 17-month high of 8.4%, retail inflation surges to 5.21% in DecemberRising food prices pushed Indiaâs retail inflation in December to 5.21%, intensifying pressure on RBI to raise policy rates in the next few monthsLast Published: Fri, Jan 12 2018. 10 55 PM ISTAsit Ranjan MishraAnnual retail food inflation rose 4.96% in December from 4.35% in the previous month. Photo: HT
New Delhi: Indiaâs factory output growth leapt to a 17-month high in November, partly the effect of a lower year- ago base in the aftermath of demonetisation, and retail inflation also quickened to a 17-month high, confirming that an economic recovery is underway amid rising price risks.
Data released by the Central Statistics Office (CSO) on Friday showed the Index of Industrial Production (IIP) rose to 8.4% in November from 2% in October; inflation measured by the Consumer Price Index (CPI) accelerated to 5.21% in December from 4.88% a month ago.
This is the final set of data that finance minister Arun Jaitley will have before him as he sits down to finalize the budget for 2018-19, to be presented on 1 February.
CSO on 5 January projected economic growth to decelerate to 6.5% in 2017-18 from 7.1% last year. Growth will accelerate to 7% in the second half of the year (October-March) from 6% in the first half (April-September), CSO said.
The economy has been hurt by the lingering impact of the invalidation of high-value banknotes in November 2016 and disruptions caused b y the goods and services tax, introduced on 1 July.
Commerce and industry minister Suresh Prabhu tweeted: âThe upswing in economic activity continues! Index of Industrial Production grows by 8.4% in Novâ17. Economic reforms unleashed by the Govt under #Leadership of Hon.PM @narendramodi showing results!â
Higher inflation in December was due to hardening vegetable prices (29%) and rising cost of housing (8.25%) after the governmentâs decision to increase house rent allowances for central government employees in line with the 7th Pay Commission recommendations.
The divergent IIP and CPI trend has dashed any hopes of monetary easing in the near future, said D.K. Pant, chief economist at India Ratings and Research Pvt. Ltd. âIf inflation continues to follow past seven monthsâ trend, the monetary authority may start thinking about tightening of monetary policy,â he added.
The Reserve Bank of India (RBI) maintained a neutral stance in its December mo netary policy review, citing the risk of rising inflation.
Inflation has quickened because of a low base effect, said Richa Gupta, senior economist at Deloitte India. âThe current print is unlikely to lead to any major change in the RBIâs stance in the near term as inflation is likely to head downwards in the second half of the year once the unfavourable base effects wane. That said, energy and commodity prices could exert some pressure if global growth momentum picks up from current levels,â she added.
In terms of industries, 15 out of the 23 industry groups in the manufacturing sector showed growth. The group âBodies of trucks, lorries and trailersâ recorded the highest growth of 202% in November. Sales of commercial vehicles were up 52.62% in December, according to data from the Society of Indian Automobile Manufacturers.
Output of the group âdigestive enzymes and antacidsâ grew 110% and made the highest contributionâ"2.5 percentage pointsâ"to overall IIP growth.
Production of gold jewellery (-68.7%) and anti-malarial drugs (-66.4%) registered the highest decline in production in November.
While the manufacturing sector was the key driver of growth at 10.2%, mining output and electricity generation slowed to grow at 1.1% and 3.9% respectively.
Output of capital goods, a proxy for investment demand in the economy, grew for the fourth successive month at 9.4%. Production of consumer non-durables jumped 23.1%. Output of consumer durable products grew by just 2.5%, reflecting weakness in urban demand.First Published: Fri, Jan 12 2018. 07 33 PM IST
Latest News Â»
- Cyrus Mistry himself sought guidance from Ratan Tata, says Tata Sons
- India INX daily trading turnover crosses Rs2,100 crore mark
- Need to shift focus from border with Pakistan to that with China: Army chief Bipin Rawat
- BMW hits 2017 sales record but Mercedes keeps lead
- Tencent sells $5 billion bond, drawing comparisons with Alibaba
Editor's Picks Â»
Reliance Jio planning own cryptocurrency called JioCoin
Infosys profit up 38% sequentially, maintains full-year revenue forecast
November IIP growth rises to 17-month high of 8.4%, retail inflation surges to 5.21% in December
Mint on Sunday Â»
The enduring legend of a Spanish dancer who became an Indian queen
The Curl Manifesto
Indianization of the classical guitar
Fishes of gold
The Omakase way
Mark to Market Â»
A double whammy for PwC and a wake-up call for all auditors
Tata Chemicals: Divestment done, now new business development challenge awaits
Is IndusInd Bank losing s ome steam?
TCSâs December quarter results will disappoint investors again
Construction sector: FDI cannot be a game changer unless execution hurdles ease