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Industrial production slows to 4.5%; slowing price growth in food, housing cools inflation to 3.31%
Growth in industrial activity as measured by the Index of Industrial Production slowed marginally in September to 4.5% due to slowing growth in the manufacturing and capital goods sectors, official data released on Monday showed. A separate data release also showed that consumer inflation, as measured by the Consumer Price Index, eased in October to 3.31% due to slowing price growth in the food, housing, and footwear segments. IIP growth slowed from 4.67% in August. (August’s IIP growth was revised from the provisional 4.3% released earlier.) Growth in manufacturing eased to 4.62% in September from 5.08% in August. Activity in mining and quarrying accelerated, growing at 0.21% in September compared with a contraction of 0.54% in the previous month. “While statistically marginal, the overall production and manufacturing indices show a rise in absolute terms indicating that domestic demand likely remains resilient,” Anis Chakravarty, Lead Economist & Partner at Deloitte India said in a note. Growth in the electricity sector touched 8.24% in September, up from 7.59% in the previous month. The capital goods sector, however, saw growth slowing to 5.76% from 9.34%. Growth in infrastructure and construction sped to 9.5% in September from 7.95% in August.
Easing inflation
Consumer inflation eased in October from 3.7% in September. Inflation in the food and beverages segment contracted 0.14% in October compared with growth of 1.01% in September.
“The October CPI print surprised positively as it was much lower than our and the street expectations,” B. Prasanna, group executive and head – Global Markets Group at ICICI Bank said in a note. “It continued to be aided by the food component which shrunk on a sequential basis underscored by components such as fruits, vegetables and pulses. The earlier fears of Minimum Support Price hikes feeding through to CPI have been allayed.” The clothing and footwear category saw inflation easing to 3.55% from 4.64% over the same period. Inflation in the housing segment slowed to 6.55% from 7.07%. “Benign inflation and a strong footing in industrial development are expected to boost investor sentiment and increased FDI and FII inflows in the coming months,” Rajeev Talwar, president, PHD Chamber of Commerce and Industry said. “Stability in inflation would strengthen the macroeconomic environment and pave the way for soft monetary policy regime, going forward.”
