Industrial output slips to 4-month low

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The cumulative IIP growth for the period April-February period of the current financial year over the corresponding period of the previous year stood at 0.4 percent, as per the data released by Central Statistics Office Friday.

Meanwhile, industrial output contracted 1.2 per cent in February due to a sharp decline in production of consumer goods, both consumer durables and non-durables, reflective of subdued consumption demand. Index of Industrial Production had recorded a 3.3 per cent growth in January, the data showed.

Also, the consumer price index-based inflation rose to a 5-month high of 3.81 per cent in March against 3.65 per cent in February. "The government should continue its reform measures and deepen it in times to come to strengthen the manufacturing sector".

The decline was broad-based with manufacturing contracting 2%, mining reporting a 3.3% rise in February and electricity generation stagnant at 0.3%.

Output of intermediate goods went up by 1.0 percent and of capital goods, such as machinery, by 0.9 percent.

Vegetables inflation continued to remain in the negative territory for the seventh straight month at 7.24 per cent in March, while inflation rate for pulses contracted 12.42 per cent from (-) 9.02 per cent a month ago.

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Production of capital goods declined 3.4%, highlighting the continued weakness in investment activity.

The non-durable consumer goods output shrank by 8.6 percent in the month over a contraction of 4.9 percent year ago.

Consumer food price inflation however, eased to 1.93 per cent in March as compared to 2.01 per cent in February.

With analysts expecting a further rise in inflation in coming months, most are ruling out a cut in interest rates. For milk & products and eggs, prices were up by 4.69 per cent and 3.21 per cent respectively. Prices of prepared meals, snacks and candies grew by 5.65%.

"If this is so, the RBI inflation forecast of 4-4.5 per cent will be materially undershot", it added.