New data on economy shows industrial production revives, but inflation makes a come back

Expectation of Indian economy making a lead performance during the year is now supported by early industrial data. The index of industrial production data released today indicated revival of the industrial sector backed by strong manufacturing sector performance. According to the new trend, industrial production picked up by 4.1%, recording a two month high.

Last week, the World Bank and other institutions have estimated that the world economy including many EMEs are going to register one of their worst years in 2015. The World Bank has predicted that India will be the highest growth contributor from the emerging world.

During April, the manufacturing sector which constitutes to more than 75 per cent of the industrial production index grew at higher rate of 5.1 per cent in April as against 3 per cent in the same month last year. Sixteen out of the 22 industry groups in the manufacturing sector have shown positive growth in April.
Inflation makes a comeback and records near five per cent

In another significant macro data, the CPI figure for May hints that inflation pressure build up; but not in the conventional sectors of food or manufacturing but in transport sector. The CPI data brought by the Ministry of Statistics and Programme Implementation shows that for the month of May, the CPI inflation rate registered 5.01 percent compared to 4.87% in the previous month.

A notable development in the inflation front is that core inflation has witnessed a continuous increase for the third consecutive month. Core inflation is that one for the whole economy especially which is not seasonal.

The slight upward movement of inflation is due to price rise in transport and communication sector.  According to the estimate, the core inflation has increased for the third consecutive year, indicating slight and notable build up in prices.

*********

Tags : india industrial production