New Delhi: Dashing hopes of quick recovery, industrial output for July slowed to 4-month low growth rate of 0.5 percent due to contraction in manufacturing and poor offtake of consumer goods, though retail inflation for August eased marginally to 7.8 percent.
Factory output, as measured by the Index of Industrial Production, had grown by 2.6 percent in July last year.
For the first four months of 2014-15 fiscal, IIP has recorded 3.3 percent growth, as against a contraction of 0.1 percent in the April-July period of 2013-14.
"The muted performance of industrial sector...Indicates that full fledged industrial recovery could still be some distance away. However, anecdotal evidence suggests some pick- up in new orders," CII Director General Chandrajit Banerjee said, adding that a sustained recovery would be indicated by an improvement in off-take of commercial credit.
Reserve Bank of India, which has maintained an hawkish stance on interest rate, is scheduled to announce the next monetary policy on September 30.
As per the IIP data, only 12 of the 22 industry groups in manufacturing showed positive growth in July.
The data on retail inflation suggested that easing prices of vegetables, cereals and petroleum products brought down retail inflation marginally to 7.8 percent in August.
Consumer Price Index (CPI) based retail inflation was at 7.96 percent in July. In August 2013, it was 9.52 percent.
However, food inflation last month rose to 9.42 percent over 9.36 percent in July, an official release said today.
The rate of price rise in vegetables stood at 15.15 percent in August, as against 16.88 percent in July.
The rate of price increase in cereals and its products turned lower at 7.39 percent and that of fuel and light came down at 4.15 percent.
Meanwhile, IIP for June has been revised upwards to 3.9 percent from the provisional estimates of 3.4 percent, according to data released by the Central Statistics Office.
Manufacturing - which constitutes over 75 percent of the index, contracted by 1 percent in July, compared to 3 percent growth in output a year ago. For April-July, it has grown at 2.3 percent, compared to 0.1 percent contraction in the year-ago period.
FICCI President Sidharth Birla said: "While we were hoping that slowdown in manufacturing had bottomed out, it appears from July numbers that manufacturing may not out be out of the woods. It is worrying that deceleration in July is somewhat broad based extending to consumer durables and capital goods."
The consumer goods output contracted by 7.4 percent in July compared, to 0.7 percent contraction logged a year ago. For April-July, the segment shows a contraction of 4.5 percent, compared to a decline of 1.8 percent in the same period of 2013-14.
The consumer durables segment declined by 20.9 percent in July, as against a dip of 9.6 percent a year ago.
For April- July, it declined 12.5 percent as against a dip of 11.9 percent in the four month period of last fiscal.
However, the consumer non-durable goods output grew at 2.9 percent in July, compared to 7.4 percent in same month last year. During April-July, the segment has grown at 1.3 percent compared to 7.2 percent in same period last fiscal.
