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August factory output up 4.3%, September inflation stagnant

New Delhi, Oct 12 (IANS) Even as retail inflation in India stagnated in September with a marginal drop in the food prices, the Index of Industrial Production (IIP) for August showed that factory output grew 4.3 per cent against the same month last year on the back of robust mining and electricity sector growth, official data showed on Thursday.

According to the Ministry of Statistics and Programme Implementation, September's consumer price index (CPI) inflation remained static at 3.28 per cent as compared to August.

On a sequential basis, the country's Consumer Food Price Index (CFPI) dropped to 1.25 per cent during the month under review when compared to 1.52 per cent in August 2017.

However, on a year-on-year (YoY) basis, the country's September retail inflation was lower than the 4.39 per cent CPI rate reported for the corresponding month of last year.

The drop in retail inflation on a YoY basis was due to a fall in the prices of food items like pulses, eggs and spices. Vegetables in September became costlier by 3.92 per cent, while cereals prices rose by 3.70 per cent.

As against the 4.3 per cent growth in August, manufacturing output in the country in July 2017 had grown marginally by 1.2 per cent as compared to the corresponding month of last year.

As per the new IIP, with the revised base year of 2011-12, factory output had declined by (-)0.1 per cent during June due to a drop in manufacturing, from a rise of 2.80 per cent reported for May this year.

The cumulative growth for the period April-August 2017 was at a much lower 2.2 per cent, over the corresponding period of last year.

Data released by the Central Statistics Office (CSO) showed that the August growth was partly led by a revival in electricity, which grew at 8.3 per cent over the same month last year.

Manufacturing output, which has the maximum weightage in the overall index, grew at 4.3 per cent in August, as against 5.5 per cent during the same month of last year.

Mining output during the month in consideration recorded impressive growth of 9.4 per cent, as compared to the decline in August last year at (-)4.3 per cent.

Among the six use-based classification groups, the output of primary goods grew by 7.1 per cent, consumer non-durables by 6.9 per cent and infrastructure or construction goods by 2.5 per cent.

Both capital goods and consumer durables recovered from last month's decline to grow in August at 5.4 per cent and 1.6 per cent, respectively.

In contrast, the output of intermediate goods declined by (-)0.2 per cent.

"In terms of industries, 10 out of the 23 industry groups in the manufacturing sector have shown positive growth during the month of August 2017 as compared to the corresponding month of the previous year," the CSO said.

"The industry group 'Manufacture of computer, electronic and optical products' has shown the highest positive growth of 24.9 per cent, followed by 16.5 per cent in 'Manufacture of pharmaceuticals, medicinal chemical and botanical products. On the other hand, the industry group 'Manufacture of furniture' has shown the highest negative growth of (-)16.0 per cent followed by (-)15.1 per cent in 'Manufacture of tobacco products' and (-)1.4 percent in 'Printing and reproduction of recorded media'," it added.

Industry welcomed the numbers indicating a rebound in industrial growth.

"Rebound in IIP is inspiring after a slowdown in the months of June 2017 and July 2017 vis-a-vis destocking and teething problems of GST," President PHD Chamber Gopal Jiwarajka said in a statement here.

"Industrial activity shrugged off the weakness of past few months and put up a strong performance in August, suggesting that GST-related disruptions could have somewhat settled," rating agency CRISIL said in a statement.

"In the months ahead, inflation could see an upside from some bump up in oil prices, and higher household spending led by (i) implementation of farm loan waiver and (ii) an expected upward revision in salary and allowances of state government employees," it added.