" However, sectors like consumer goods remain a cause of concern. We are hopeful that the steps taken by the Government so far and measures announced in the budget would help in further revival of the sector, Birla added. "
New Delhi, Aug 12 - Expectations of a rate cut by the central bank in the next monetary policy update received a setback Tuesday as India's retail inflation rose to a two-month high, amid slower growth in factory output.

Data released by the statistics and programme implementation showed the annual inflation based on consumer price index rising to 7.96 percent in July from 7.46 percent in the month before, even as the index for industrial production (IIP) showed a lower growth of 3.4 percent in June, against 5 percent in May.

The cumulative growth in factory output, measured in terms of the Index of Industrial Production (IIP) for the period April-June 2014-15 over the corresponding period of the previous year stood at 3.9 percent.

Industrial production grew 5 percent in May, while the drop in June is mainly due to the lower output of consumer goods.

Factory output figures remained in the positive mainly due to improved performance in the manufacturing, mining and power sectors and capital goods sectors.

Manufacturing grew 1.8 percent in June, compared to the decline in output by 1.7 percent a year ago.

For April-June, manufacturing grew at 3.1 percent, as against the contraction of 1.1 percent in the same quarter of the last fiscal.

As per IIP data, consumer goods output of contracted by 10 percent in June, as against the contraction of 1.5 percent a year ago. For the April-June quarter, consumer goods show a contraction of 3.6 percent compared to a fall of 2.1 percent in the same period of 2013-14.

The consumer durables segment fell by 23.4 percent in June, as against a decline of 10.1 percent a year ago. For the April-June period, it declined by 9.6 percent as against a fall of 12.7 percent in the first quarter of the previous fiscal.

Consumer non-durables grew at a rate of only 0.1 percent in June compared to 6.2 percent in same month last year.

Consumer price (CPI) inflation accelerated to a two-month high of 7.96 percent in July, pushed up by rising prices of vegetables, fruit and milk.

Food price inflation under a new series published by the government jumped in July to 9.36 percent from 7.97 percent in the previous month.

Commenting on the IIP figures Chandrajit Banerjee, director general, CII said that growth in industrial

production, which has been on the ascendant for the last two months, has shown a decline in June on the back of sluggish performance of the manufacturing sector.

We would like to see this as an aberration, as CII's own Business Outlook survey and the ASC'N survey are showing early signs of an industrial turnaround, Banerjee said.

It is reassuring to see that growth is broad based as 15 out of 22 sectors have shown positive growth during June 2014, said Sidharth Birla, president, FICCI, in a statement.

However, sectors like consumer goods remain a cause of concern. We are hopeful that the steps taken by the Government so far and measures announced in the budget would help in further revival of the sector, Birla added.

Positive growth in the IIP during the last 3 months in a row is encouraging and indicates strong recovery in the coming times, said Sharad Jaipuria, president PHD Chamber, in a press statement.


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