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Inflation at 16-month-high 5.7%, factory output dips for 2nd month

Rising for the the sixth straight month, retail inflation touched a 16-month high of 5.69 per cent in January, mainly due to costlier food prices. Retail inflation, as measured by the Consumer Price Index (CPI), stood at 5.61 per cent in December 2015 and 5.69 per cent in January 2015. The pace of retail price rise in January 2016 is the highest since 6.46 per cent in September 2014. Food inflation, as measured by Consumer Food Price Index (CFPI), quickened to 6.85 per cent in the first month of 2016, Government data showed on Friday. Retail prices of ‘cereals and products’ inched up by 2.19 per cent in January, from 2.12 per cent in December 2015.

The rate of price rise in meat and fish category was 8.23 per cent during the month, while it was 3.96 per cent for eggs. The substantial price rise in these items is mainly attributed to their higher consumption during winter. However, prices of seasonal fruits witnessed deflation during the month, with a fall of (-)0.24 per cent.  But vegetable prices moved up fairly at 6.39 per cent. Prices of ‘pulses and its products’ continued to stay elevated, as inflation was as high as 42.32 per cent, according to the data released by the Central Statistics Office under the Ministry of Statistics and Programme Implementation.

The inflation rates, based on CPI for rural areas, stood at 6.48 per cent in January, while that for urban areas was 4.81 per cent. The price data are collected by the government from selected towns by the Field Operations Division of National Sample Survey Organisation (NSSO) and from selected villages by the Department of Posts.

Industrial production declined for the second month in a row, registering negative growth of 1.3 per cent in December, mainly due to drop in manufacturing and capital goods sector. Factory output measured in terms of Index of Industrial Production (IIP) also declined by 3.4 per cent in November, according to data released by Central Statistics Office (CSO).

The index had registered a growth of 3.6 per cent in December 2014, it said. During April-December period this fiscal, the industrial output grew by 3.1 per cent compared to 2.6 per cent a year ago.

The decline in December has been primarily on account of a massive drop in output of capital goods which showed a contraction of 19.7 per cent in December compared to growth of 6.1 per cent in the same month a year ago. The manufacturing sector,  which accounts for over 75 per cent of the index, declined by 2.4 per cent against a growth of 4.1 per cent in December 2014.

However, the mining sector showed an improvement, registering a growth of 2.9 per cent in the month as against a contraction of 1.7 per cent in same month a year ago. Power generation showed deceleration, recording a growth of 3.2 per cent as against 4.8 per cent growth in same month a year ago.

As per the used based classification, basic goods reported a marginal increase of 0.5 per cent as against 5.9 per cent in December 2014. The consumer goods output increased to 2.8 per cent as against 0.6 per cent in December last fiscal.

Consumer durables, however, showed robust growth of 16.5 per cent in December as against a contraction of 9.2 per cent during the same month last fiscal. However, the consumer non-durable segment showed a contraction of 3.2 per cent in December.
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