IIP growth tepid, CPI inches up

The Index of Industrial Production (IIP) witnessed a growth of below 2 per cent for the second time in 3 months in January 2019. IIP growth stood at 2.6 per cent in December. Retail inflation saw a trend reversal after 4 months of continuous decline.

The slowdown in industrial activity was due to de-growth seen in the manufacturing, electricity and capital goods sectors. The manufacturing sector witnessed a slowdown in growth to 1.3 per cent in January from 2.65 per cent in December. The electricity sector witnessed a growth of only 0.8 per cent as against 4.45 per cent in December.

The strongest growth was witnessed in the construction sector at 7.9 per cent but was still lower than 10 per cent clocked in December. Mining and quarrying saw an acceleration of growth to 3.9 per cent in January as against 0.39 per cent in December.

Government spending usually sees an expansion by March. However, the government remains keen on meeting the revised fiscal deficit target and hence seems to have cut down on capital expenditure.

Consumer Price Index (CPI) inched up to 2.57 per cent in February as against 1.97 per cent in January. This was predominantly due to increasing food prices, except vegetables. Inflation in food and beverages stood at -0.07 per cent in February as against -1.29 per cent in January. Core inflation, however, witnessed a marginal decline, reflecting easing input costs and pricing powers.