Double whammy with IIP, Inflation

India’s industrial output unexpectedly fell 1.2% in February from a year earlier government data showed on Wednesday

The capital goods output declined by 3.4 per cent in February.

Output of intermediate goods went up by 1.0 percent and of capital goods, such as machinery, by 0.9 percent.

Overall, food inflation was at 1.85 percent as against 2.01 percent in February.

The manufacturing sector, which accounts for more than 75 percent of the index of industrial production (IIP), degrew -2 percent in February compared to 2.3 percent in January and 0.7 percent in February past year.

In terms of industries, 15 of the 22 industry groups in the manufacturing sector contracted during February.

Industrial production in Bulgaria saw 5% increase year on year in February. The cumulative growth for the period April-February 2016-17 over the corresponding period of the previous year stands at 0.4 percent.

The mining output rose by 3.3 per cent and that for electricity generation inched up by 0.3 per cent.




The non-durable consumer goods output shrank by 8.6 percent in the month over a contraction of 4.9 percent year ago.

Commenting on IIP data, FICCI president Pankaj Patel said: "The fall in the manufacturing sector".

Meanwhile, retail inflation rose marginally to 3.81 per cent in March from 3.55 per cent in February 2017.

India adopted an inflation target of 4% last year for a five-year period with a 2 percentage point tolerance band on either side.

The data comes soon after the monetary policy review last week when the Reserve Bank of India had retained the repo rate at 6.25 per cent due to upside risks to inflation and excess liquidity in the system.

CARE Ratings said that the worrisome feature is that non-food components still witnessed high rates: clothing 4.6%, fuel and light 5.6%, housing 5%, transport 6%.

On the inflation front, the increase was sharp for items such as sugar and fruits, while prices of vegetables and pulses actually dropped, according to the provisional data released by the Narendra Modi government on Wednesday evening.

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