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  Business   Factory output dips, inflation up

Factory output dips, inflation up

AGE CORRESPONDENT
Published : Feb 13, 2016, 3:50 am IST
Updated : Feb 13, 2016, 3:50 am IST

India’s industrial production contracted for the second straight month in December, while retail inflation unexpectedly edged up to a 16-month high in January throwing a challenge to the Narendra Mod

India’s industrial production contracted for the second straight month in December, while retail inflation unexpectedly edged up to a 16-month high in January throwing a challenge to the Narendra Modi government before the forthcoming Union Budget.

Industrial production growth shrank by 1.3 per cent in December. The contraction, however, was smaller than a revised 3.4 per cent fall in November, according to data released by Central Statistics Office (CSO) on Friday.

Retail inflation based on Consumer Price Index (CPI) too rose for the sixth straight month to 5.69 per cent in January, on the back of costlier food prices including pluses. The pace of retail price rise in January 2016 is the highest since 6.46 per cent in September 2014.

The manufacturing sector, which accounts for over 75 per cent of the index of industrial production, declined by 2.4 per cent against a growth of 4.1 per cent in December 2014. There was a massive drop in output of capital goods which contracted by 19.7 per cent in December. It had grown by 6.1 per cent in December 2014. The consumer non-durables also contracted by 3 per cent in December.

The mining sector showed an improvement, growing by 2.9 per cent in December as against a contraction of 1.7 per cent in same month a year ago. The Modi government has been taking measures to improve coal production in the country be removing regulatory hurdles.

Meanwhile according to the inflation data, the prices of pulses rose by 43 per cent in January. 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. Vegetables and oil and fats prices too rose by over six per cent in January. “On the whole, food prices were sticky in January 2016, with the month-on-month fall in prices of pulses, fruits and vegetable offset to a large extent by substantial increases in sugar and protein items like meat, fish and eggs,” said Aditi Nayar, senior economist, ICRA.

Location: India, Delhi, New Delhi