Industrial output muted at 1.4%, inflation rises to six-month high

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New Delhi, January 12

In twin blows for the economy, industrial production remained muted for the third straight month in November 2021 while retail inflation rose to a six-month high of 5.59% in December.

The Index of Industrial Production (IIP) grew by 1.4% in November as most components like manufacturing, electricity, mining, primary goods, and consumer durables witnessed a slowdown, according to data released by the National Statistical Office (NSO) on Wednesday.

Retail inflation, measured as Consumer Price Index (CPI) rose to 5.59% in December as against 4.91% in November mainly due to sharp increase in food inflation from 1.87% to 4.05% and elevated fuel inflation though it has softened after the cut in taxes on petrol and diesel. It was 4.59% in December last year.

The factory output, measured as Index of Industrial Production (IIP), grew 1.4% in November as compared to the same month last year but it has risen by 17.4% during April to November this year manly due to a 15.3% contraction during the same period last year.

On the inflation front, there is a dichotomy in rural and urban areas. While the rural inflation rate was 5.36%, in urban areas it was 5.83%.

In CPI, the high rates of oil and vegetables, meat and eggs, and cereals besides nearly 11% fuel inflation were the main contributors to the increase.

“This data is crucial as this is the last metric before the RBI’s Monetary Policy Committee (MPC) meeting next month,” said Nish Bhatt of Millwood Kane International.

Major components witness slowdown

• The Index of Industrial Production (IIP) grew by 1.4% in November as most components like manufacturing, electricity, mining, primary goods, and consumer durables witnessed a slowdown, according to data released by the National Statistical Office (NSO) on Wednesday
• Retail inflation rose to six-month high of 5.59% in December as against 4.91% in November mainly due to sharp increase in food inflation from 1.87% to 4.05%