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June retail inflation at 5%, May industrial output declines

Author: IANS/Friday, July 13, 2018/Categories: Economy

June retail inflation at 5%, May industrial output declines

New Delhi - Retail inflation in India touched the 5% mark in June, compared to 4.87% in May, even as industrial output in May grew at 3.2% over the same month last year but declined as compared to rise of 4.9% in April mainly on account of a decline in manufacturing, official data showed on Thursday.

As per data released by the Central Statistics Office (CSO), the average annual rate of inflation as per the consumer price index (CPI) in June last year was 1.46%. 

The consumer food price index (CFPI) in June at 2.91%, however, softened as compared to the 3.10% of the previous month. The inflation in vegetables dropped to 7.8% from 8.04% in the previous month. 

The CPI for the 'fuel and light' category rose to 7.14% in June, from 5.8% in May. 

The higher inflation last month comes in the backdrop of rising global crude oil prices which have been ruling at over $75 a barrel.

Breaking the cycle of interest rate cuts begun in January 2015, the Reserve Bank of India (RBI), at its last monetary policy review in June, raised its repo rate by 25 basis points to 6.25% citing inflationary concerns. 

It also revised upwards its inflation projection to 4.8-4.9% for the first half of the current fiscal. 

The fall in the Index of Industrial Production in May was caused by a sharp slowing in the growth of the manufacturing sector which registered a growth of 2.8%, as compared to 5.2% in April. 

"The industry group 'Other manufacturing' has shown the highest negative growth of (-) 31.9% followed by (-) 15.6% in 'Manufacture of tobacco products' and (-) 12.8% in 'manufacture of wearing apparel'," a CSO statement said.

"The industry group 'Manufacture of computer, electronic and optical products' has shown the highest positive growth of 27.0% followed by 21.1% in 'Manufacture of motor vehicles, trailers and semi-trailers' and 13.2 percent in 'Manufacture of furniture'."

Mining output in May at 5.7% in May improved marginally over the 5.1% in April.

Electricity production in the month under consideration rose to 4.2% over the 2.1% in April. 

The cumulative IIP growth for the period April-May 2018 over the corresponding period of the previous year stands at 4%, the statement added. 

The IIP for April has been revised to 4.8%, from the earlier figure of 4.9%. 

Commenting on the IIP data, Deloitte India Lead Economist Anis Chakravarty said in a statement: "The recent easing came largely on the back of manufacturing, while improvements were made across mining and electricity. That said, the movement in manufacturing remains largely steady which bodes well for economic growth, especially when the economy remains at risk from global changes." 

"A clear positive was on food price momentum that remained muted... Although core remains elevated that may keep RBI on guard. We have not yet removed the 'risk' of one more rate hike," said Yes Bank Group President Shubhada Rao.

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