Double Whammy! CPI Soars To 11.2%, IIP Slumps By 1.8%

Amidst hope of a recovery in the second half, the industrial output in India contracted after three months in October, official data showed today. The Index of Industrial Production (IIP) declined 1.8% in October against 2% growth in the previous month. The factory output had grown at a 15 month high of 8.4% in the same month last year. Two of the three major segments -- mining and manufacturing output shrank in October even as electricity showed sluggish expansion. Mining contracted 3.5% against 0.2% growth in October 2012. Manufacturing, which comprises 75% of the total index, saw a decline in the production by 2% against a high 9.9% growth a year ago. Electricity production rose 1.3% against 5.5% growth. The consumer goods segment contracted by 5.1% against a staggering 13.8% growth in October last year as the durable goods, which had been decline throughout the year continued its bad run. The consumer durable goods output went down by 12% in October against a rise of 16.7% a year ago. Even the capital and intermediate goods grew at a snail's pace this month. While capital goods rose 2.3%, the intermediate goods expanded 1.8% in October this year. The industrial production has been stagnant throughout the year if we take into account its growth in the April-October period against 1.2% expansion in the same period a year back. On the other hand, The retail price index-based inflation rose to 11.24% in November from 10.09% in the previous month, official data showed today. This could become give ammunition to the opposition against the ruling coalition, which lost elections to four assemblies on the issue of price rising among other factors. The inflation could also desist RBI from easing its monetary stance to perk up economic growth. Inflation in vegetables zoomed to 61.60% in November against 45.67% in October. The retail-price inflation rose in both urban and rural parts. While, it increased to 10.53% in urban areas from 10.20% in the previous month, the rate of price rise in rural areas went up to 11,74% from 10.11%. Yesterday, Reserve Bank of India governor Raghuram Rajan had said inflation has resurfaced. "We are one of the large countries in the world with the highest CPI (Consumer Price Index-based inflation)...," he had said. The RBI is slated to come out with its review next week . Earlier on Sunday, Congress president Sonia Gandhi had said price rise was an issue in elections. Source :  www.moneycontrol.com/news/ibu_index.php?storyid=2245