In November, factory production decreases, and in December, the price of food fuel increases

In November, factory production decreases, and in December, the price of food fuel increases

In November, factory production decreases, and in December, the price of food fuel increases

November had an eight-month low for industrial output growth of 2.4%, while December saw a 5.69% increase in inflation.

The industrial production growth rate, which was 4.61% in April of this fiscal year, continued to gain speed and saw double-digit growth in August and October due to increases in mining output, the lowest-ever rise in electricity generation, and festival demand for manufactured products. Prior to the year beginning in November

New Delhi: According to data published on Friday, declining industrial output and increasing prices meant that the Indian economy was facing a double whammy at year's end.

The consumer price index (CPI)-based inflation rate increased 5.69% in December, the quickest rate in four months, while industrial production growth fell to an eight-month low of 2.4% in November, according to the statistics ministry.

While industrial production increased 6.4% between April and November of this fiscal year, it gained 5.5% over the same period last year, despite signs of a downturn in the rate of manufacturing expansion in November.

The high rate of inflation highlights the central bank's cautious approach to interest rate changes and suggests potential government action to halt price increases.

The retail inflation rate increased at its quickest rate since August 2023 in December, rising to 5.69% from 5.55% in the previous month. It's interesting to note that from April to December 2023, December had the highest monthly retail inflation rate, followed by July and August. Due to a substantial increase in the cost of vegetables and other food products such as pulses, spices, and grains, July had the highest inflation rate of 7.4% in the previous fifteen months.

The government had taken supply-side actions in response to earlier high levels of inflation, such as releasing significant stores of grain and closely monitoring pulse imports and exports to maintain supplies. In an effort to curb inflation, the government also outlawed the export of sugar and rice.

For the fourth consecutive month, December's CPI inflation rate was within the RBI's tolerance range of 2-6% even though it was still over the 4% objective. Retail inflation was 5.7% in December 2022; but, according to a Mint survey of 19 analysts, that figure is expected to increase to 5.9% in the same month.

Food inflation increased to 9.53% in December from 8.70% in November, 6.61% in October, and 6.62% in September. Food inflation is determined by the Consumer Food Price Index, which makes up about half of the entire consumer price basket.

In November 2022, industrial production increased by 7.6% as shown by the Index of Industrial Production (IIP). Manufacturing production increased 1.2%, mining 6.8%, and power 5.8% in November compared to the same month last year.

In November, capital goods production—a measure of fixed investment in the economy—fell 1.1% year over year. Meanwhile, the month saw a 5.4% annual fall in the output of consumer durables, a key indicator of consumer mood.

In November 2023, the growth rate of monthly industrial output was the lowest compared to the April-November period. The industrial production growth rate, which was 4.61% in April of this fiscal year, continued to gain speed and saw double-digit growth in August and October due to increases in mining output, the lowest-ever rise in electricity generation, and festival demand for manufactured products. Prior to going inside. November of the year.

According to Rajni Sinha, chief economist at CareAge, "month-over-month contraction in the power and manufacturing sectors hampered overall IIP growth, while the unfavorable economic conditions resulted in a broad-based growth slowdown."

The rise in food inflation to a four-month high of 9.53% drove the steady climb in retail inflation. Spices, fruits, vegetables, and legumes lead the food inflation. The good news about inflation in general, and food inflation specifically, is that, according to a statement from India Ratings, cereal and product inflation dropped to single digits and decreased for the fifth straight month, after a 15-month hiatus. In December 2023, it fell to 3.89%, a 48-month low. It said, "It is puzzling that core inflation has decreased during a period of robust economic growth."

The Reserve Bank of India (RBI) raised its growth projections for FY24 after data from the September quarter revealed an excellent rise of 7.6% in the Indian economy, driven mostly by the industrial sector. Has been corrected to 7%. 6.5% was the prior estimate.

In fiscal 2014, India's growth rate was 7.3%, according to the government's first advance projections, which were made public last month. This increase was fueled by robust production in manufacturing, construction, and some services as well as continuous investment development.

In the first preliminary estimates, the Finance Ministry stated robust domestic consumption and investment propelled GDP growth in H1FY24.

The GDP share of private final consumption expenditure (PFCE) increased by 4.5% to reach 60.4%, the highest level in the first half of the year. From FY 2012, omitting the epidemic year of FY 2011.

Vegetable inflation for grains and pulses was 27.64% and 20.73% in December, respectively, much higher than the 17.70% and 20.23% seen in November.

In December, the inflation rate for "food and beverages" was 8.70%, compared to 8.02% in November and 6.24% in October.

Delhi and Jammu & Kashmir had the lowest retail inflation rates among the states, at 2.95% and 4.15%, respectively, while the highest rates of inflation for rice prices were reported by Odisha (8.73%), Gujarat (7.07%), and Haryana (6.72%).

India's manufacturing sector is contracting at a time when the nation is dealing with difficulties like sluggish global growth and demand. Due to the impact on Indian exports, the trade gap has greatly widened and export growth has slowed recently.

However, because of greater than anticipated consumption, foreign agencies and the RBI have upped their growth estimates for India's FY2024 economy.

The International Monetary Fund (IMF) and the World Bank forecast the Indian economy to expand at 6.3% in FY 2024.