Mining slump drags factory output growth to 3-month low of 4.3% in Aug

Factory output growth slipped to a three-month low of 4.3 per cent in August due to a sharp slump in mining output growth and moderation in primary goods output, alongside the impact of a high base. Meanwhile, retail inflation inched higher to a two-month high of 3.77 per cent in September from a 10-month low of 3.69 per cent in the previous month on the back of rise in fuel prices, data released by Central Statistics Office (CSO) Friday showed.

Industrial output had grown at 6.7 per cent in July 2018 and 7.1 per cent in August last year. Inflation, based on the Consumer Price Index (Combined) had stood at 3.28 per cent in September last year. Cumulatively, however, the Index of Industrial Production (IIP) recorded an improvement during April-August, rising to 5.2 per cent as against 2.3 per cent a year ago.

Economists said core-core inflation (inflation excluding food, fuel & light and transport & communication), which has
remained above 5 per cent for last 11 months, coupled with the slower IIP growth hints at weakening demand. Incidentally, after two successive rate hikes, the Reserve Bank of India’s monetary policy committee (MPC) kept key policy rates unchanged last week, citing a tepid inflation trajectory and downward revision to inflation projections.
However, the central bank’s stance was changed from “neutral” to “calibrated tightening”. The International Monetary

Mining slump drags factory output growth to 3-month low of 4.3% in Aug Fund (IMF) on Tuesday called for further tightening of monetary policy in India to anchor expectations as inflation was expected to pick up. According to the data released Friday, mining output posted a contraction of 0.4 per cent during August as against 3.4 per cent growth in July and 9.3 per cent growth in the year ago period. Primary goods output also slowed to 2.6 per cent in August from 6.7 per cent a month ago and 7.1 per cent in August last year.


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