India's industrial production grows 7.5% in January

Teresa John analysts at Nirmal Bang expected, CPI inflation for February 2018 to come in at 4.9%, down from 5.1% in the previous month. January saw annual consumer inflation of 5.1 percent, off the December figure of 5.2 percent, which was the highest rate in 17 months.

Mumbai: India's annual retail inflation eased for a second straight month in February to 4.44 per cent as food prices fell, government data showed on Monday.

Inflation for the fuel and light category was at 6.80 percent in February (against 7.73 percent in January).

"The eventual rabi harvest, distribution of the 2018 monsoon and the operationalization of the proposals made in the Union Budget for FY19, including the launch of Operation Greens and the augmentation of minimum support prices, would impact the trajectory of food inflation going forward", she added. Retail prices of pulses, sugar and spices contracted in February. Both were lower than in January.

In December, the index of industrial production (IIP) grew 7.1%, while consumer price index (CPI)-based inflation had slowed to 5.1% in January. While the manufacturing sector grew 8.7% in January, compared with 2.5% in the same month past year, capital goods grew 14.6% and consumer non-durables 10.5% in the month under review. Consumer non-durable goods, which are mainly fast moving consumer goods, also recorded an increase of 10.5 per cent as against a growth of 9.6 per cent a year ago.

The IIP growth in January this year was mainly on account of uptick in manufacturing sector which constitutes 77.63% of the index.

Analysts polled by Reuters had predicted February's rate would ease to 4.8% from 5.1% in January.

Factory output measured by the index of industrial production (IIP) is the closest approximation for measuring economic activity in the country's business landscape.

As per use-based classification, the growth rates in January 2018 over January 2017 are 5.8% in primary goods, 4.9% in intermediate goods and 6.8% in Infrastructure/ Construction Goods. However, mining grew by a mere 0.1 per cent in the month. It looks like post-demonetisation and GST implementation finally the industrial sector is gaining traction.

According to Devendra Pant, Chief Economist at India Ratings, robust growth of consumption-related sectors will provide stability of Gross Domestic Product (GDP) growth in the next financial year as private final consumption expenditure (PFCE) is the biggest component while calculating GDP. In terms of industries, 16 out of 23 industry groups in the manufacturing sector showed positive growth during January, 2018. What is also noteworthy is the spike in consumer durables and non-durables demand.

  • Eleanor Harrison