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Industrial Output Grew 12.3% in June, Retail Inflation in July Falls to 6.71%

Industrial Output

India’s industrial output grew 12.3% in June, moderating from 19.6% this May, led by a 16.4% uptick in electricity and 12.5% growth in manufacturing. Mining activity grew 7.5% in the month.

The Index of Industrial Production (IIP), however, grew only 0.14% over May 2022 levels, with Manufacturing being the only sector to report a sequential uptick in output in June, rising 1.34%.

However, July is the seventh consecutive month when the retail inflation remained above the RBI’s tolerance range of 2-6 per cent. The retail inflation in June had stood at 7.01 per cent, which was slightly lower than 7.04 per cent in May. Inflation in rural areas in June was at 7.09 per cent during June 2022, while that in urban areas was 6.92 per cent.

In the first three months of the current fiscal, retail inflation remained above 7%.

Meanwhile, India’s factory output, measured by the Index of Industrial Production (IIP), came in at 12.3% for the month of June, compared with 19.6% reported in May, the government data has showed. The coronavirus pandemic had weighed on Industrial production since March 2020, when it had contracted 18.7%.

The manufacturing sector’s output grew 12.5% in June 2022. The mining output climbed 7.5%, and power generation increased 16.4% in June this year.

ICRA chief economist Aditi Nayar attributed the broad-based drop in the IIP growth rate to the effects of a ‘normalising base’. Yet, manufacturing growth spurred the numbers higher than the 10.2% estimated by the rating agency.

“Given the moderation in the year-on-year performance recorded by most high-frequency indicators in July 2022, such as electricity generation and non-oil exports, we expect the IIP growth to ease to high single digits,” she said.

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