India's factory output up 2.6%, retail inflation slows

India's industrial output growth accelerated to 2.6% in January, mainly driven by growth in the capital goods sector, government data showed on Thursday.

Bringing some cheer to an otherwise disturbed industry, India's factory output in January gained momentum and rose 2.6% against 1.1% increase during the corresponding month of 2014, even as retail inflation slowed at 5.37% in February against 7.88% in the like month of last year.

Official data on Index for Industrial Production (IIP) showed that the rise in the total factory output was mainly led by a 3.3-% expansion in manufacturing, as also 2.7% in electricity, even as mining activity declined 2.7%.

The data on Consumer Price Index (CPI), which measures retail inflation, showed a rise of 4.95% in the urban areas and a bit more at 5.79% in the rural segment, to take the combined figure to 5.37% in February.

The CPI was, however, marginally higher when compared to the figure of 5.19% for January 2015. The February food inflation stood at 6.79%.

As per final CPI inflation rate figures for January 2015 furnished by the Central Statistics Office (CSO), the CPI urban for January stood at 4.96% and rural at 5.34%. January food inflation stood at 6.14%.

Meanwhile, there was a massive increase in January 2015 IIP which was up 2.6% from a growth of 1.7% during December 2014. In November 2014, the IIP had increased by 3.8%, while in October it decelerated by 4.2%.

The cumulative growth of IIP for April-January 2014-15 stood at 2.5% while the figure for the corresponding period of the previous fiscal stood at 0.1%.

Manufacturing of basic and capital goods showed growth during the month under review. However, production of intermediate goods fell. Production of basic goods grew by 4.5%, while capital goods production was up 12.8%, though intermediate goods declined by 0.8%.

The production of consumer durables and consumer non-durables plunged. The production of consumer durables was down 5.3%, while consumer non-durables segment marginally went down by 0.1% in the month under review.

The overall consumer goods segment was down 1.9%.

Overall, 14 out of the 22 industry groups in the manufacturing sector have shown positive growth during the month under review.

Segment-wise, high positive growth was reported in boilers (20.8%), room air conditioners (23.4%), rice (25.6%), carbon steel (29.4%), cable, rubber insulated (39.5%), PVC pipes and tubes (41.0%), plastic machinery including moulding machinery (41.1%), gems and jewellery (44.4%) and stainless/alloy steel (68.5%).

Segment-wise, high negative growth was reported in colour TV sets (-20.6%), wooden furniture (-22.7%), generator/alternator (- 23.4%), steel structures (-34.2%), computers (-39.7%), tractors (-40.6%), ship building and repairs (-42%) and telephone instruments, including mobile phones and accessories (-57.9%).