Industrial growth slows to 1.4%, inflation soars to 5.59%

While industrial growth is slowing down, retail inflation is increasing. According to a couple of press releases issued today by the Ministry of Statistics & Programme Implementation, the index of industrial production (IIP) grew by 1.4 per cent in November, the consumer price index (CPI) soared to a five-month high of 5.59 per cent for December.

Sluggishness in the IIP was primarily because of unimpressive performance, 0.9 per cent, in manufacturing, which has almost 78 per cent weight in the index. In the April-November period, manufacturing did very well with 18.5 per cent; this, however, was primarily because of a very low base of -17.2 per cent in the corresponding period last fiscal.

In the April-November period, the IIP grew by 17.4 per cent.

As per the use-based classification, capital goods, indicating capacity addition, remain a cause of concern. In November, the segment declined by 3.7 per cent; worse, the decline was against an already bad performance, -7.5 per cent in November 2020. In the April-November period, growth was in the positive territory, 29 per cent. In the same period in 2020-21, however, the segment had registered -31.1 per cent. Which means that in November, capital goods were at a lower level than in 2019.

Consumer durables too fell by 5.6 per cent, against an already -3.2 per cent in November 2020. In the April-November period, growth was apparently impressive—24 per cent. But this was against -28.2 per cent in the corresponding period the previous fiscal. Again, this means that consumer durables have yet to reach the 2019 level.

The December retail inflation was quite close to the Reserve Bank of India’s (RBI’s) upper limit of 6 per cent. As per the government mandate, the RBI is expected to maintain retail inflation at 4 per cent, with 2 per cent margin on both sides for the period ending March 2026.

Steep rise in inflation of the food basket was mainly because of the spike in prices of oils and fats, which rose 24.32 per cent in December.