Retail inflation spikes to 7-month high of 3.05% in May on costlier food articles; factory output grows 3.4% in April

Retail inflation spiked to a seven-month high of 3.05 percent in May, though remaining within RBI’s comfort level, as kitchen items like vegetables, meat and fish turned dearer, government data showed on Wednesday. The consumer price index (CPI) based retail inflation for April was revised marginally upwards to 2.99 percent from the earlier estimate of 2.92 percent, as per the data released by the Central Statistics Office (CSO) of the Ministry of Statistics and Programme Implementation. Retail inflation stood at 4.87 percent in May 2018. The previous high was in October 2018, when the retail inflation print came in at 3.38 percent. Vegetable prices witnessed a sharp rise during May this year at 5.46 percent as against 2.87 percent in April 2019.

Prices of meat and fish went up by 8.12 percent (from 7.55 percent), while the inflation print for cereal and products rose to 1.24 percent (from 1.17 percent) in May this year. However, prices of fruits continued to show a deflationary trend with an inflation rate of (-)5.17 percent against (-)4.89 percent in the preceding month. For fuel and light category, inflation stood at 2.48 percent as against 2.56 percent in April. Inflation for the overall food basket, based on consumer food price index, increased to 1.83 percent in May as against 1.10 percent a month earlier, the data showed. Retail inflation is a crucial data point, keenly watched by the Reserve Bank while deciding its monetary policy.

Industrial growth at 6-month high of 3.4 percent in April

Meanwhile, India’s industrial output grew to a six-month high of 3.4 percent in April mainly on account of improvement in mining and power generation, according to government data released Wednesday. The Index of Industrial Production (IIP) had expanded by 4.5 percent in April 2018. The previous high in IIP growth was recorded at 8.4 percent in October 2018. The expansion in the mining sector was 5.1 percent compared to 3.8 percent in the year-ago month. Similarly, the growth in the power sector was 6 percent in April as against 2.1 percent in the corresponding month of the last fiscal. However, there was a slowdown in the manufacturing sector. As per Central Statistics Office (CSO) data, manufacturing growth slipped to 2.8 percent in April from 4.9 percent in the corresponding period last year. Giving further details, the CSO data revealed that the growth in capital goods segment, barometer of investment activities, slowed sharply to 2.5 percent from a high of 9.8 percent in April 2018. Similarly, slower growth was recorded in infrastructure/construction goods, consumer durables and consumer non-durables, segments in April 2019 on annual basis. However, the production of primary goods increased by 5.2 percent in April this year as against 2.7 percent year-on-year. In terms of industries, 14 out of 23 industry groups in the manufacturing sector showed positive growth during April 2019 as compared to the corresponding month of the previous year. The industry group ‘manufacture of wearing apparel’ has shown the highest positive growth of 33.6 percent followed by 22.6 percent in ‘Manufacture of wood and products of wood and cork, except furniture On the other hand, the industry group ‘manufacture of paper and paper products’ showed the highest negative growth of (-) 12.3 percent followed by (-) 9.6 percent in ‘manufacture of fabricated metal products.

— With PTI inputs