Industry Output Grows 13.6% in June; Retail Inflation Eases 5.59% in July

The manufacturing sector grew by 13% in June this year; mining sector output rose by 23.1%

Industry Output Grows 13.6% in June; Retail Inflation Eases 5.59% in July
Industry Output Grows 13.6% in June; Retail Inflation Eases 5.59% in July
Indrishka Bose - 12 August 2021

Industrial production rose by 13.6 per cent in June mainly due to a low-base effect and good performance by manufacturing, mining and power sectors but the output still remained below the pre-pandemic level. The IIP had contracted by 16.6 per cent in June 2020.

The manufacturing sector, which constitutes 77.63 per cent of the Index of Industrial Production (IIP), grew by 13 per cent in June this year, according to the data released by the National Statistical Office (NSO) on Thursday.

The mining sector output rose by 23.1 per cent in June while power generation increased by 8.3 per cent.

In June 2021, the IIP stood at 122.6 points compared to 107.9 points in the same month last year. The index was at 129.3 points in June 2019 as per the NSO data.

Industrial production had plunged 18.7 per cent in March last year following the Covid-19 outbreak and remained in the negative zone till August 2020.

With the resumption of economic activities, factory output rose 1 per cent in September. The IIP had grown by 4.5 per cent in October. In November 2020, the factory output fell 1.6 per cent and then entered the positive territory by growing 2.2 per cent in December 2020.

The IIP had recorded a contraction of 0.6 per cent in January and 3.2 per cent in February this year. In March, it grew by 24.2 per cent. For the month of April, the NSO held back the release of complete IIP data. In May this year, it grew 28.6 per cent.

"The growth rates over the corresponding period of the previous year are to be interpreted considering the unusual circumstances on account of Covid-19 pandemic since March 2020," NSO said in a statement.

Earlier, the ministry had given a disclaimer that it may not be appropriate to compare the IIP in the post-pandemic months with the data for the months preceding the Covid-19 outbreak.

The manufacturing sector had recorded a contraction of 17 per cent in June 2020. The mining sector output fell 19.5 per cent in the same month last year. The electricity generation had declined 10 per cent in June 2020.

Retail inflation eased to 5.59 per cent in July mainly due to softening food prices, according to official data released on Thursday.

The Consumer Price Index (CPI) based inflation was 6.26 per cent in June and 6.73 per cent in July 2020.

“It will be vital to track any sustainable recovery in demand (apart from the pent-up portion) that typically creates price pressures which are more sticky but responsive to monetary policy, unlike supply-side pressures,” said Sreejith Balasubramanian, Economist – Fund Management, IDFC AMC.

The output of capital goods, which is a barometer of investment, grew 25.7 per cent in June 2021 as against a contraction of 37.4 per cent in the year-ago period.

Consumer durables manufacturing increased 30.1 per cent in the month under review compared to a 34.8 cent decline in June 2020. Consumer non-durable goods production fell by 4.5 per cent in June this year whereas it had grown by 6.9 cent in the year-ago period.

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