Industrial output shrinks after two months of revival but retail inflation eases

Retail inflation based on the Consumer Price Index (CPI) was 6.93 per cent in November

Bucking the revival trend in the past two consecutive months, India’s industrial production contracted 1.9 per cent year-on-year in November, data released by the government showed, signaling that economic recovery remains uneven.

However, the retail inflation came down to 4.59 per cent in December from 6.93 per cent a month ago, giving much needed relief to the policy makers as food inflation slowed.

Food inflation declined to 3.41 per cent in December compared to 9.5 per cent in the previous month.

According to the Index of Industrial Production (IIP) numbers, manufacturing sector output declined by 1.7 per cent and mining by 7.3 per cent in November.

But the IIP decline was on expected lines as output of the eight core sectors, which account for over 40 per cent of the total weight of the IIP, declined 2.6 per cent in November as against a fall of 0.9 per cent the previous month.

The sharpest decline in core sector output in three months in November was on account of a contraction in five of the eight sectors.

A fresh cause of concern was in the steel and cement sectors where output collapsed in November after posting a handsome recovery in the previous few months.

Electricity generation, however, grew 3.5 per cent as business activities accelerated after Covid-19 related relaxation took place.

The IIP had grown by 2.1 per cent in November last year. But it expanded 3.6 per cent in October this year, giving hopes of fast revival of the economy amid the pandemic.