New Delhi, Feb 12:
Bearing out the Reserve Bank of India’s policy review last week on risks to the inflation target, the January retail inflation moved up to 5.11 percent month-on-month, while factory output grew marginally at 1.7 percent in December 2014 compared to 3.9 percent a month ago.
Measured by the Central Statistical Office (CSO) on a new base year of 2012, the January inflation rose mainly due to higher food prices, including fruits and vegetables.
The December retail inflation based on the Consumer Price Index (CPI), recalculated with the new base year, was at 4.28 percent.
The CPI inflation in December was 5 percent with 2010 as the base year.
Food inflation in January was 6.13 percent due to costlier fruits, vegetable and cereals.
The CPI urban for January stood at 4.96 percent and rural at 5.25 percent. January food inflation stood at 6.06 percent.
The data is based on the revised base year. “The Central Statistics Office (CSO), Ministry of Statistics and Programme Implementation has revised the Base Year of the Consumer Price Index (CPI) from 2010 to 2012,” an official statement here said.
“We have shifted to geometric mean for computing inflation from arithmetic mean used in previous series,” chief statistician TCA Anant told reporters here.
RBI Governor Raghuram Rajan had said last week that attaining the projected inflation target of six percent by January 2016 is at risk due to expected “food price shocks as the full effects of the monsoon’s passage unfold and from geo-political developments that could materialise rapidly”.
Industrial activity, measured in terms of the Index of Industrial Production (IIP), registered growth of 1.7 percent during December 2014 from a 0.1 percent increase during the corresponding month of 2013.
In November, the IIP had increased by 3.8 percent, while in October it decelerated by 4.2 percent.
The cumulative growth for April-December 2014-15 stood at 2.1 percent while the figure for the corresponding period of the previous fiscal stood at 0.1 percent.
The gain in the month under review came mainly due to the higher output of the manufacturing sector.
In December, the manufacturing sector grew by 2.1 percent from a negative growth of 1.1 percent in the corresponding month of 2013.
Electricity sector rose 4.8 percent from a 7.5 percent increase in December 2013.
However, the mining sector declined 3.2 percent from an increase of 2.6 percent in the corresponding month of 2013.
Manufacturing of basic, capital and intermediate goods showed growth during the month under review. Production of basic goods grew by 2.4 percent, while capital goods was up 4.1 percent and intermediate goods rose by 0.1 percent.
Overall, 13 out of the 22 industry groups in the manufacturing sector have shown positive growth during the month under review.
Segment-wise, high negative growth was reported in ship building and repairs (-52.3 percent), wood furniture (-26.5 percent), sugar machinery (-48.6 percent), tractors (-42.6 percent), computers (-36 percent), glass sheet (-31.6 percent), colour TV sets (-26.6 percent), steel structures (-24.3 percent) and telephone instruments including mobile phones and accessories (-80.1 percent).
The figures squarely put the focus on the government’s first full-fledged budget coming up Feb 28.
Commenting on the data, A Didar Singh, secretary general of industry chamber FICCI said: “We are hopeful that the forthcoming budget would factor-in the slow growth in manufacturing for the last many months and the need to provide major incentives to revive investments in the sector.”
“The demand in the economy also remains subdued as reflected in the muted growth of consumer goods sector. Further lowering of interest rates by RBI is needed to boost consumer and investment sentiments,” he added.
“The union budget presents a great opportunity to provide further fillip to investment. Some measures that could be considered could include incentivizing the Make in India initiative by reworking minimum alternate tax, restoring incentives for SEZs as well as providing a stable, transparent and predictable tax and regulatory environment for business,” the Confederation of Indian Industry said in a statement here.
“The CPI for January at 5.11 percent in the new series of data is well below the expectations suggesting clearly the price situation is gliding path faster than the RBI expectations,” said Rana Kapoor, president of the Associated Chambers of Commerce and Industry of India (Assocham). IANS