May 28 2020
Factory growth slows to 10-month low
13 October 2018

Slowdown in consumer durables hits August manufacturing ; retail inflation rises to 3.77% in Sept.

Industrial production slowed to a 10-month low of 4.3% in August, due in large part to a drastic deceleration in the manufacturing, mining, and consumer durables sectors, according to official data released on Friday.

The Index of Industrial Production (IIP) slowed in August from its growth rate of 6.61% in July. Within the index, the manufacturing sector slowed to 4.6% in August from 6.96% in July, while the mining sector contracted by 0.4% in August, down from a growth of 3.68% in July.

The starkest slowdown, however, was in the consumer durables sector, which saw growth come down to 5.2% in August from 14.36% in the previous month.


Factory growth slows to 10-month low

“There is definitely a slowdown, led by a slowdown in consumer durable demand,” D.K. Srivastava, chief policy advisor, EY India said. “And this is reflected in the output side by a slowdown in manufacturing and mining.”

“In such a setting, there is possibly an overall growth slowdown that is being registered,” Mr. Srivastava added. “In other centres, the story is the same. And, exports are also not rising too fast. There is a need to be very cautious about the growth potential now. The festive season will likely give some relief, but what is needed now is policy support.”

The consumer non-durables sector in the IIP witnessed an acceleration in growth to 6.3% in August from 5.61% in the previous month.

Stable inflation

Consumer price inflation, as measured by the consumer price index (CPI), accelerated marginally in September to 3.77% from 3.69% in August. Within this, inflation in the food and beverages segment quickened to 1.08% from 0.78% over the same period.

“CPI inflation is fairly stable, with only a slight increase, and that also because of food prices and transport and communication prices, which increased marginally,” Mr. Srivastava added. “While the overall price scenario remains stable, growth is the aspect that requires policy intervention.”

The pan, tobacco and intoxicants sector saw inflation accelerating to 5.57% in September from 5.41% in August. The clothing and footwear segment, however, saw inflation slowing to 4.64% from 4.88% over the same period. Similarly, inflation in the housing segment slowed to 7.07% in September from 7.59% in August.

Notably, inflation in the fuel and light segment eased marginally in September to 8.47% from 8.55% in August.



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