India's retail inflation rises 8-month high of 7.34% in September; Industrial production contracts 8% in August

Industrial production, however, declined by 8% in August, mainly due to lower output of manufacturing, mining, and power generation sectors, according to official data. 

India's retail inflation rises 8-month high of 7.34% in September; Industrial production contracts 8% in August
Image courtesy: Reuters

New Delhi: The retail inflation rose to an eight-month high of 7.34 percent in September amid rising prices of essential kitchen items. Industrial production, however, declined by 8 per cent in August, mainly due to lower output of manufacturing, mining, and power generation sectors, according to official data released by the Ministry of Statistics and Programme Implementation on Monday (October 12).

According to the Index of Industrial Production (IIP) data, manufacturing sector production registered a decline of 8.6 per cent, while the output of mining and power segments fell 9.8 per cent and 1.8 percent, respectively. The IIP had contracted by 1.4 percent in August 2019.

"It may not be appropriate to compare the IIP in the post-pandemic months with the IIP for months preceding the COVID 19 pandemic," said the official data, adding "With the gradual relaxation of restrictions, there has been a relative improvement in the economic activities by varying degrees as well as in data reporting." 

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The contraction in IIP in July, however, has been revised to (-)10.8 per cent from the (-) 10.4 per cent provisional data released last month. Similarly, May IIP has been revised marginally to 33.4 per cent contraction from 33.9 percent decline.

The decline in IIP for June remained unchanged at (-) 15.8 per cent. The government had imposed a lockdown to contain the spread of COVID-19 infections on March 25, 2020. The IIP had shrunk by 57.3 per cent in April as most industrial and commercial establishments remained closed.

Meanwhile, the Consumer Price Index (CPI)-based inflation was 6.69 per cent in August and 3.99 per cent in September 2019.
Inflation has been hovering above 4 per cent since October 2019. The previous high in the CPI was witnessed at 7.59 per cent in January 2020.

According to the National Statistical Office (NSO) data, the Consumer Food Price Index (CFPI) crossed the double-digit mark and was 10.68 per cent in September. It was 9.05 per cent in the previous month. 

The inflation in the vegetable segment was 20.73 per cent in September, significantly up from 11.41 per cent in the preceding month. Similarly, the rate of price rise in the fruits was high over August.

Data showed that the rate of price rise in the protein-rich eggs was 15.47 per cent in September compared to 10.11 per cent in August. The retail inflation was also high month-on-month in 'meat and fish', and 'pulses and products'. However, it was lower in 'cereals and products' and 'milk and products'.

The government data further showed that the CPI-based price rise was lower in the 'fuel and light' segment at 2.87 per cent during September over 3.10 per cent in the preceding month.

Notably, the price data for calculating retail inflation are collected from representative and selected 1,114 urban markets and 1,181 villages in the country through personal visits by the field staff of Field Operations Division of NSO, MoSPI on a weekly roster. 

As per the latest data, the manufacturing sector, which constitutes 77.63 per cent of the IIP, recorded a decline of 8.6 per cent in August 2020, as against a contraction of 1.7 per cent in the same month last year. 

Similarly, mining sector output fell 9.8 per cent as against a flat growth in August 2019. Power generation shrank by 1.8 per cent, compared to a contraction of 0.9 per cent a year ago.

Output of capital goods, which is a barometer of investment, fell by 15.4 per cent in August as against a contraction of 20.9 per cent earlier.

Consumer durables output also declined by 10.3 per cent, as against a contraction of 9.7 per cent in August 2019, while the consumer non-durable goods production fell 3.3 per cent, compared to a growth of 3.1 per cent a year ago.

The IIP for April-August period has contracted by 25 per cent, according to the data. It had registered a growth of 2.5 per cent during the same period last fiscal. 

(With Agency Inputs)