IIP shrinks by 2.4% in July, retail inflation eases to 5.05% in August

NEW DELHI: India’s industrial output fell 2.4% in July after a spurt in May and June, much due to a decline in manufacturing output.

A slowdown in industrial activity does not bode well for Asia's third largest economy, especially after overall growth faltered to a 15-month low between April and June.

Data released by the statistics office showed a 3.4% decline in manufacturing production in July and marginal 0.8% rise in mining output. Manufacturing as a sector has the highest weight in the Index of Industrial Production (IIP). The pace of electricity generation slowed to 1.6% compared with sharp rises in the last few months.

June IIP reading was revised to a 1.9% increase, compared with the 2.1% rise reported earlier.

India’s retail inflation slowed to 5.05% in August led by easing food prices especially vegetables and making a strong case for the newly appointed RBI governor Urjit Patel to cut rates in the next monetary policy review on October 4.

Food inflation was up 5.91% and vegetable prices cooled down to 1.02% from a 14% sharp rise in July.

The Consumer Price Index (CPI), the gauge of inflation at the retail level, is still above the Reserve Bank of India's target of 5% by March 2017.

Prices rose the sharpest in sugar and confectionery which became dearer with a 24.75% rise followed by a 22% rise in pulses prices. Food and beverages became expensive by 5.83% while fuel and light became pricier by 2.49%.