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Dipping inflation, rising IIP bring cheer to economy

Retail inflation, as measured by the consumer price index (CPI), fell to 4.83%, while industrial output, measured by the index of industrial production (IIP), rose to 2% in April.

The fall in CPI was led by weakening of core inflation while electricity, minerals and gems and jewellery led strength to the IIP.

Macro-economic data points – retail inflation, factory output — presented good tidings for the Indian economy and markets, coming as they did within hours after the IMD’s forecast of above-average monsoon this year.

Breaking the spell of contraction in industrial output in the past three months, the IIP growth for February came in at 2%.

This was, however, lower than 4.8% growth recorded in February last year.

Electricity, gems and jewellery and minerals aided the overall industrial performance growth.

The electricity sector was the chief driver of growth in February, contributing an estimated 0.9% of the 2% rise in the IIP Index in that month.

IIP growth stood at a meagre 2.6% in April 2015-January 2016, lower than the 2.8% rise recorded in the first 11 months of 2014-15.

The performance was mixed across the use-based categories, with a weaker performance displayed by basic goods, capital goods and consumer non-durables, offsetting improvements in consumer durables and intermediate goods in the first 11 months of 2015-16 as compared with the same period of the previous fiscal.

CPI highlights:  

Food inflation at 5.21% vs 5.3% (m-o-m)
Vegetable price inflation at 0.54% vs 0.7% (m-o-m)
Combined fuel & light inflation at 3.38% vs 4.59% (m-o-m)
Clothing, footwear inflation at 5.50% vs 5.52% (m-o-m)
Cereals & products inflation at 2.43% vs 2.18% (m-o-m)
Milk & products inflation at 3.33% vs 3.66% (m-o-m)
Pulses & products price inflation at 34.15% vs 38.3% (m-o-m)
Urban consumer housing inflation at 5.31% vs 5.33% (m-o-m)

IIP highlights: -

Mining sector output at 5% vs 1.2% (m-o-m)
Manufacturing sector output at 0.7% vs -2.8% (m-o-m)
Electricity sector output at 9.6% vs 6.6% (m-o-m)
Basic goods output at 5.4% vs 1.8% (m-o-m)
Capital goods output at -9.8% vs -20.4% (m-o-m)
Intermediate goods output at 5.7% vs 2.7% (m-o-m)
Consumer goods output at 0.8% vs zero (m-o-m)
Consumer durables output at 9.7% vs 5.8% (m-o-m)
Consumer non-durables output at -4.2% vs -3.1% (m-o-m)