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India's Industrial Output Jumps to 14-Month High, Retail Inflation Eases

Strategic Insights

— 1 min read

India's industrial production index (IIP) grew at a 14-month high of 10.3% in August, driven by a base effect and an uptick in manufacturing, mining, capital goods, and consumer durables. The inflation rate for consumers, or retail inflation, eased to a three-month low of 5.02% in September, primarily due to a sharp moderation in food prices, especially vegetables, and the impact of the LPG price cut. Factory output improved, with manufacturing output growing by 9.3% in August, accounting for 77.6% of the IIP weight. However, seven of the 23 sectors in manufacturing registered a contraction, with electronics, apparel, and furniture being the significant non-performers.

Key Takeaways:

  • India's industrial production index (IIP) grew at a 14-month high of 10.3% in August, driven by a base effect and an uptick in manufacturing, mining, capital goods, and consumer durables.
  • Retail inflation eased to a three-month low of 5.02% in September, primarily due to a sharp moderation in food prices, especially vegetables, and the impact of the LPG price cut.
  • Factory output improved, with manufacturing output growing by 9.3% in August, accounting for 77.6% of the IIP weight.
  • Seven of the 23 sectors in manufacturing registered a contraction, with electronics, apparel, and furniture being the significant non-performers.
  • Consumer durables output returned to positive territory for the second time this fiscal, growing by 5.7% in August, reflecting a pickup in consumption demand.
  • Primary, infrastructure/construction, and capital goods recorded double-digit growth rates in August at 12.4%, 14.9%, and 12.6%, respectively.
  • Core inflation (non-food, non-fuel segment) eased to 4.7% in September, the lowest since February 2020, as per ICRA estimates.

Statistics:

  • India's industrial production index (IIP) grew at a 14-month high of 10.3% in August.
  • Retail inflation eased to a three-month low of 5.02% in September.
  • Manufacturing output grew by 9.3% in August.
  • Consumer durables output grew by 5.7% in August.
  • Core inflation (non-food, non-fuel segment) eased to 4.7% in September.
  • 13 states recorded higher-than-average retail inflation rate in September, with the highest inflation rate seen in Rajasthan (6.53%).
  • Food inflation for rural areas was 6.65% in September, and 6.35% in urban areas.

Sources:

  • National Statistical Office (NSO)
  • Reserve Bank of India (RBI)
  • ICRA Ltd
  • Bank of Baroda
  • CareEdge
  • IE Online Media Services Pvt. Ltd.

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