Industrial production growth up 4.3% in July, retail inflation touches 3.21%

Retail inflation inches up to 3.21% in August; factory output at 4.3% in July

Retail inflation inches up to 3.21% in August; factory output at 4.3% in July

Driven by costlier food items, retail inflation inched up to 10-month high of 3.21 per cent in August but remained within the RBI's comfort level and may prompt the central bank for one more round of rate cut as another set of government data revealed industrial production growth slowed to 4.3 per cent in July.

According to data released by the government's statistics wing, the rate of industrial production, as reflected by the Index of Industrial Production (IIP), came in at 4.3 per cent in July as against 1.1 per cent in June and 6.5 per cent in July past year.

Retail inflation in rural areas declined slightly from 2.19% in July to 2.18% in August.

But economist Diane Swonk of Grant Thornton said rising core inflation could stir up opposition within the Fed to further interest rate cuts. The fuel and light sector saw a contraction in prices by 1.7% compared with a contraction of 0.29%. Inflation rate in the education segment was recorded at 6.10 per cent in August. Factory output had grown 6.53 per cent in the year-ago period.

In terms of industries, thirteen out of the twenty three industry groups in the manufacturing sector have shown positive growth during the month of July 2019 as compared to the corresponding month of the previous year.

The slowdown in industrial output was primarily due to slump in the manufacturing sector, which grew at 4.2 per cent in July 2019 as compared to 7 per cent a year ago.

Echoing similar sentiments, Devendra Kumar Pant, Chief Economist with India Ratings & Research, said that with first quarter GDP growth falling to 5 per cent and private final consumption expenditure growth declining to 3.1 per cent, the pressure will be on the RBI to take monetary measures to support growth. "Although the RBI is likely to continue with its monetary easing, we do not expect a rate cut at the next monetary policy".

The cumulative growth for the period April-July 2019 stood at 3.3 per cent, down from 5.4 per cent growth in the same period a year ago. The core PCE price index rose 1.6 per cent on a year-on-year basis in July and has fallen short of its target this year. The last month had lowered its benchmark repo rate for a fourth meeting in a row. Mining sector grew at 4.9 per cent in July as compared to 3.4 per cent in the corresponding period a year ago.