Protein intake expensive as inflation goes up, so is industrial output

Industries happy with manufacturing sector but capital goods output still down

GN Bureau | June 13, 2015

#inflation   #pulses   #fruits   #vegetables   #industrial output   #manufacturing sector   #capital goods   #cii   #ficci   #assocham  

As Maggi controversy alters the household consumption habits, the retail inflation is going to make changes in the family budgets as pulses and protein-rich food items turn expensive.  Consumer price index-based inflation rose to a three-month high of 5.01 per cent in May.

Prices of pulses rose by 16.62 percent in May 2015 over the same month last year, according to the data released on Friday. Domestic pulses production fell by nearly two million tonnes in 2014-15 crop year due to unfavourable weather conditions such as untimely rains.

Prices of protein-rich items such as 'meat and fish' rose by 5.43 percent, while spices turned costlier by 8.82 percent in the month.

The inflation for fruit and vegetables was 3.84 percent and 4.64 percent, respectively, in May 2015.

Among others, milk and its products were costlier by 7.43 percent in May 2015 over the same month last year.

Prices of prepared snacks and meals rose by 7.89 percent, clothing and footwear category by 6.12 percent, housing by 4.64 percent and fuel and light by 5.96 percent.

Of the other categories, oils and fats prices rose by 1.95 percent, cereals and products by 1.98 percent, while that of egg declined by 0.78 percent in May 2015.

However, there is good news on the industrial front. The Industrial production grew at a two-month high of 4.1 per cent in April, primarily driven by the manufacturing sector.

Manufacturing output, which constitutes over 75 per cent of the index, grew at higher rate of 5.1 per cent in April as against 3 per cent in the same month last year. The industrial growth for March too has been revised upwards to 2.5 per cent from 2.1 per cent, as per the data released on Friday evening.

However, there has been fall in capital goods growth. It is the production of capital goods that is taken as indicator of demand, grew at a slower pace of 11.1 per cent in April as against 13.4 per cent in the same month last year. Mining sector too grew at a slower rate in April at 0.6 per cent as against 1.7 per cent in April last year.

In terms of industries, 16 out of the 22 industry groups in the manufacturing sector have shown positive growth during April compared with the corresponding month previous year.

The industry group ‘Machinery and equipment’ has shown the highest positive growth of 20.6 per cent, followed by 16.2 per cent in ‘wood and products of wood and cork except furniture’, the data said.

On the other hand, the industry group ‘office, accounting and computing machinery’ has shown the highest negative growth of 36.5 per cent, followed by 34 per cent in ‘radio, TV and communication equipment and apparatus’ and 26.7 per cent in ‘tobacco products’.

On the other hand, electricity production contracted by 0.5 per cent, while it had expanded by 11.9 per cent in the same month last year.

Meanwhile, industry bodies said the recovery is firmly taking root and turnaround in the investment cycle is imminent.

“The figures, which are above market expectations, indicate that green shoots of recovery are currently underway which is also evident by higher excise duty collections during the month,” CII Director General Chandrajit Banerjee said.

“Going forward, CII is hopeful of growth picking up pace backed by positive sentiment and a flurry of policy initiatives undertaken by the government,” Banerjee added.

“The reform initiatives taken by the government, which has recently been supported by the monetary easing stance of the RBI, should bring the investment momentum back to the economy,” Assocham president Rana Kapoor has said.

“Going ahead, we expect the effective implementation of the policy environment to not only improve the growth and competitiveness of the industrial sector but also to push economic growth on high road,” PHD Chamber president Alok Shriram said.

Ficci president Jyotsna Suri said “the manufacturing growth seems to be gaining momentum now as is evident from the healthy growth of key sectors like capital goods and also from the fact that growth is more diversified.”



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