NEW DELHI: India's factory output expanded at the slowest pace in four months at 4.5 per cent while retail inflation fell to a year low and remained well below the desired 4 per cent level, showed two sets of data Monday, giving space to the RBI to ease stance in its next monetary policy.
While the industrial production growth fell to a four-month low of 4.5 per cent in September mainly due to poor performance of the mining sector and lower offtake of capital goods, retail inflation fell to 3.31 per cent in October, the lowest since September 2017 when it was 3.2 per cent.
Commenting on the two set of data released by the Central Statistics Office (CSO), industry chamber PHDCCI said that stability in retail inflation (based on Consumer Price Index) would help strengthen macroeconomic environment and pave the way for soft monetary policy regime, going forward.
Industry body Assocham said the latest IIP number is a positive sign towards revival of industrial activities.
The industrial production or factory output measured in terms of Index of Industrial Production (IIP) was 4.1 per cent in September 2017.
The CSO has also revised slightly upward the factory output growth for August to 4.6 per cent from provisional figure of 4.3 per cent.
The IIP was recorded at 6.9 per cent and 6.5 per cent in June and July this year, respectively.
The previous low was recorded at 3.8 per cent in May this year.
The mining sector output growth decelerated to 0.2 per cent in September as against 7.6 per cent in the year-ago month.
Similarly, capital goods output growth slowed to 5.8 per cent in the month under review from 8.7 per cent a year ago.
However, the data showed that the manufacturing sector recorded a growth of 4.6 per cent in September, up from 3.8 per cent a year ago.
The electricity generation too improved to 8.2 per cent in the month from 3.4 per cent in September 2017.
For April-September 2018, the IIP growth came in at 5.1 per cent.
The factory output rise was 2.6 per cent in same period of the last fiscal.
The CSO data on CPI showed that retail inflation fell to a one-year low of 3.31 per cent in October on the back of cheaper kitchen staples, fruits and protein-rich items, official data released Monday showed.
It was 3.7 per (marginally revised downwards from earlier estimate) cent in September 2018 and 3.58 per cent in October 2017.
The retail inflation number is the lowest since September 2017 when it touched 3.28 per cent.
The rate of price rise in the food basket contracted by 0.86 per cent in October compared to 0.51 per cent rise in September, according to the Central Statistics Office data.
Vegetable prices declined by 8.06 per cent in October against a 4.15 per cent contraction in September.
Inflation also slowed to 0.35 per cent in the fruit basket as against 1.12 per cent recorded a month ago.
The retail inflation also cooled in protein-rich items like pulses, eggs, milk and related products.
However, inflation quickened to 8.55 per cent for the 'fuel and light' category against 8.47 per cent in the previous month.
The RBI's Monetary Policy Committee headed by Governor Urjit Patel would announce its policy stance on December 5.
The RBI, which reviews monetary policy on bi-monthly basis, had kept the key policy rate (repo) unchanged in October on expectations of softening price rise, but had changed the policy stance to "calibrated tightening" from "neutral".
Rating agency Ind-Ra said that the RBI may remain in pause mode in its forthcoming MPC meeting in view of conflicting trends of different segments of CPI.
Any rate hike from now till the end of 2018-19 will be more data dependent and will be governed especially by the movement of crude oil prices, which has softened recently, it added.