India's retail inflation static at 3.28% in September

The Central Statistics Office (CSO) which released the data on Thursday also revised the July IIP from 1.2 percent to 0.94 percent.

Industrial production (IIP) rose to 4.3 per cent in August, up from July's 1.2 percent growth.

In terms of industries, 10 out of the twenty three 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.

On a cautious note, this uptick in industrial growth may not sustain in September 2017, with the early indicators for industrial production in the organised sectors, namely, automobiles, coal and electricity generation, revealing some moderation in the pace of expansion from the spikes recorded in August 2017. There is further reason for reposing faith in prudence of the recovery as core areas like manufacturing, mining and electricity have been the major contributors with output of these sectors growing 3.3 per cent, 1.6 per cent and 6.2 per cent respectively in the April - August period. As per use-based classification, the growth rates in August 2017 over August 2016 are 7.1 per cent in primary goods, 5.4 per cent in capital goods and 2.5 per cent in infrastructure/construction goods.

Ten out of 23 industry groups in the manufacturing sector have shown positive growth during August 2017. Nevertheless, given the somewhat unfavorable base effect, we expect the IIP growth to ease in September 2017 relative to print of 5.0 percent in September 2016.

Consumer price inflation in India, as represented by Consumer Price Index (CPI), gained to 3.28% in September from 3.36% in the previous month.

In August, initially it had risen to 3.36% but later it was revised to 3.28%. The rates of the food products have gone down, but there is a rise in the rate of light, fuel, intoxicants, and tobacco. It was 3.66 per cent in August. Retail petrol prices in Delhi have gone up 4.7 percent and diesel 2.6 percent since August 1 despite a cut in excise duty on the two fuels by the Central government.

According to ICRA, while the impact of post-GST restocking may have started to fade, inventory building prior to the festive season is likely to have bolstered manufacturing growth in the just-concluded month.

Vanessa Coleman

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