INSUBCONTINENT EXCLUSIVE:
New Delhi: Driven by costlier food items, retail inflation inched up to 10-month high of 3.21 per cent in August but remained within the
RBI's comfort level and may prompt the central bank for one more round of rate cut as another set of government data revealed industrial
production growth slowed to 4.3 per cent in July.
Inflation based on the Consumer Price Index (CPI) stood at 3.15 per cent in July this year
Compared year over year, it was 3.69 per cent in August 2018.
The August 2019 retail inflation rate is the highest since October 2018, when
it was recorded at 3.38 per cent.
Inflation in the food basket was 2.99 per cent, up from 2.36 per cent in July.
The August data released by
the National Statistics Office in the Ministry of Statistics and Programme Implementation on Thursday also provided details of inflation in
segments like 'health', 'recreation and amusement' and 'personal care and effects'.
The retail inflation in health was 7.84 per cent,
recreation and amusement 5.54 per cent and personal care and effects 6.38 per cent.
Price rise in the 'education' segment was recorded at
6.10 per cent in August.
Inflation in meat and fish basket was 8.51 per cent, pulses and products 6.94 per cent and vegetables 6.9 per
cent.
The National Statistics Office on Index of Industrial Production (IIP) showed that slowdown in factory output was mainly due to the
poor show by the country's manufacturing sector.
The industrial output growth was recorded at 1.2 per cent in June and 4.6 per cent in May
this year.
According to data released by the Ministry of Statistics and Programme Implementation, industrial output grew at 3.3 per cent in
April-July period this fiscal, down from 5.4 per cent growth in the same period a year ago.
The IIP data showed a significant slowdown in
the manufacturing sector, which grew at 4.2 per cent in July 2019 as compared to 7 per cent a year ago.
Capital goods segment, which is a
barometer of investment, saw a contraction of 7.1 per cent in July compared to 2.3 per cent rise a year ago.
Mining growth was 4.9 per cent
in July as compared to 3.4 per cent in the same month last fiscal.
The expansion in the power generation sector stood at 4.8 per cent in
July, compared to 6.6 per cent a year earlier.
As per use-based classification, the growth rates in July 2019 over July 2018 are 3.5 per
cent in primary goods, 13.9 per cent in intermediate goods and 2.1 per cent in infrastructure/construction goods.
Consumer durable and
consumer non-durable have recorded growth of (-) 2.7 percent and 8.3 per cent, respectively.
Commenting on the inflation data, Icra's
principal economist Aditi Nayar said with the CPI recording only a mild increase in August 2019 despite the sharp uptick in the food
inflation, "we continue to expect the RBI's Monetary Policy Committee (MPC) to reduce the repo rate by 15-25 bps in the October 2019 policy
review, given the continuing concerns related to economic growth".
On IIP, Mayank Jalan, President, Indian Chamber of Commerce said need of
the hour is more fiscal stimulus to arrest the slowdown and put the economy back on the high growth path.
The RBI, which mainly factors in
CPI for arriving at its bi-monthly monetary policy, has been mandated by the government to ensure that inflation remains at 4 per cent, with
deviation of 2 per cent on either side.
The central bank, which has already reduced the key policy rate four times in the current calendar
year, is scheduled to announce its next bi-monthly monetary policy on October 4.
