Industrial Output Growth Nearly Doubles, But Inflation Inches Up

Factory output growth in April nearly doubled to 4.1 per cent compared with the revised figure of 2.5 per cent in the previous month, government data showed on Friday. The March number was revised upwards from 2.1 per cent earlier.

Economists polled by Reuters had expected the annual output growth at factories, mines and utilities to come in at 1.6 per cent.

The collection of indirect taxes in all three categories - customs, central excise and service tax - has shown a rising trend in the current financial year 2015-16, Finance Minister Arun Jaitley said recently.

"This is a very healthy growth in indirect taxes and since it is spread over all sectors it initially indicates a pickup in manufacturing particularly the excise collections have moved up," he said.

A Prasanna, economist, ICICI Securities Primary Dealership sais the data augers well for the economy.

"The higher-than-expected IIP data corroborates with the solid indirect tax growth figures released by the Finance Ministry.

"The CPI (consumer price index) data is better than what we expected. The last two readings have shown that food prices are not flaring up despite adverse weather conditions. This bodes well given the outlook for uneven monsoon distribution."

Consumer inflation in May edged up to 5.01 per cent from 4.87 per cent in the previous month government data showed on Friday. A Reuters poll of economists had forecast inflation to rise to 5 per cent.

Retail food inflation eased to 4.80 per cent last month from 5.11 per cent in April.