IIP growth slows to 2.4% in July from 12.3% in June

India's factory output, measured in terms of Index of Industrial Production (IIP), recorded a lower-than-expected growth of 2.4% in July 2022, from 12.3% the previous month and 11.5% in the corresponding month last year, data released by the National Statistical Office on Monday showed. At 2.4%, IIP growth in July is the slowest in the last four months.

The manufacturing sector, constituting nearly 77% of IIP basket, grew by 3.2% in July, sharply lower than 12.5% in June and 10.2% in the same month last year.

The NSO data shows that the mining output contracted 3.3% during the month under review, while power generation rose 2.3% in the same period.

“For the month of July 2022, the quick estimates of the Index of Industrial Production (IIP) with base 2011-12 stands at 134.6. The indices of industrial production for the mining, manufacturing and electricity sectors for the month of July 2022 stand at 101.1, 135.2 and 188.9 respectively. These quick estimates will undergo revision in subsequent releases as per the revision policy of IIP,” Ministry of Statistics & Programme Implementation says in a release.

“The indices stand at 131.7 for primary goods, 97.8 for capital goods, 148.9 for intermediate goods and 150.1 for infrastructure/ construction goods for the month of July 2022. Further, the indices for consumer durables and consumer non-durables stand at 121.5 and 143.0 respectively for the month July 2022,” it adds.

The data shows the primary goods segment recorded a growth of 2.5% in July. The other sectors such as capital goods, intermediate, and infrastructure goods registered a growth of 5.8%, 3.6%, and 3.9%, respectively. The consumer durables grew by 2.4%, while the non-durables sector contracted 2% in the month of July.

Meanwhile, India's retail inflation rose to 7% in August, bucking the three-month downward trend, due to higher food prices. Retail inflation, measured via Consumer Price Index (CPI), eased to 6.71% in July, from 7.01% in June and 7.04% in May, due to drop in international crude as well as other commodity prices. Retail inflation, however, remains above the Reserve Bank’s upper tolerance band of 6% for 8th month now.

In the food basket, which comprises 45% of the index, spices and vegetables saw the highest inflation at 13.23% and 14.90%, respectively. Food and beverages inflation stood at 7.57% in August 2022, while clothing and footwear inflation was 9.91% in August 2022. Fuel and light inflation was marked at 10.78% in August.

The data shows that the inflation rose in both rural and urban areas. The CPI inflation in rural areas was recorded at 7.15%, up from 6.80% in July 2022 and 5.28% in August 2021. In urban areas, retail inflation rose to 6.72% in August 2022, from 6.49% in July 2022 and 5.32% in August 2021.