April factory production grows; so does May's retail inflation
India's economic health showed signs of recovery as factory production expanded in April, while the country's May retail inflation remained largely subdued with a marginal rise.
Accordingly, India's factory production expanded in April 2019 by 3.4 per cent from a revised growth of 0.35 per cent reported for March, but on a year-on-year (YoY) basis, it was lower than the 4.5 per cent growth achieved during the corresponding month of the previous fiscal.
"The cumulative growth for the period April-March 2018-19 over the corresponding period of the previous year stands at 3.6 per cent," Ministry of Statistics & Programme Implementation said in the 'Quick Estimates of Index of Industrial Production (IIP)'.
The data revealed that the output rate of the manufacturing sector rose 2.8 per cent in April from a year-on-year (YoY) rise of 4.9 per cent.
On a YoY basis, mining production grew 5.1 per cent from a rise of 3.8 per cent and the sub-index of electricity generation was higher by 6 per cent from 2.1 per cent.
In terms of retail inflation, a different set of data showed a marginal rise in May retail inflation to 3.05 per cent from 2.99 per cent in April due to higher food prices.
However, on a YoY basis, the Consumer Price Index (CPI) in May 2019 was lower than the corresponding period of last year when retail inflation stood at 4.87 per cent.
The data furnished by the National Statistical Office (NSO) showed that the Consumer Food Price Index (CFPI) inflated to 1.83 per cent during the month under review from an expansion of 1.10 per cent in April 2019.
Product-wise, prices of vegetables, eggs, meat and fish pushed the retail inflation higher on a YoY basis. In contrast, decline in prices of 'cereals and products' and 'milk and products' sugar capped the overall food inflation.
As per the data, the prices of vegetables increased 5.46 per cent, meat and fish by 8.12 per cent, eggs by 1.80 per cent and pulses & its products by 2.13 per cent.
On the other hand, prices of milk-based products declined by 0.35 per cent, cereals & its products by 1.24 per cent and sugar and confectionery by 0.27 per cent.
The sub-category of food and beverages recorded a 2.03 per cent rise in April over the corresponding period of 2018. Among the non-food categories, the fuel and light segment's inflation increased to 2.48 per cent in April.
"The factory output growth for the month of April 2019 at 3.4 per cent though came in higher than 0.4 per cent last month, it is lower than 4.5 per cent recorded in the same month last year. Nevertheless this is a six month high," said Sunil Kumar Sinha, Director, Public Finance, and Principal Economist at India Ratings & Research (Fitch Group).
According to Edelweiss Securities: "CPI inflation rose 3.05 per cent in May, with sequential uptick in food components partly countered by easing in core inflation. The core inflation eased substantially again to 4.13 per cent corroborating well with the demand slowdown theme.
"We are in consonance with the RBI on near-term inflation dynamics and see another 25 bps cut in 1HFY20, with further easing contingent on data."
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