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Inflation numbers encourages improving trend: ICRA on IIP

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New Delhi [India] | January 12, 2018 12:01:13 AM IST
Commenting on India's retail inflation, which grew at 5.2 percent in December, Credit rating agency ICRA on Friday said that the extent of the uptick in IIP growth in November 2017 was far sharper than expected.

"Our expectation (5.7 percent), reflecting a favourable base effect as well as inventory rebuilding after the festive season, raising some concerns regarding its sustainability beyond Q3 Fy2018," said Principal Economist, ICRA, Aditi Nayar.

"The disaggregated data poses a mixed trend with high growth in consumer non durables, infra/construction goods and capital goods offset by modest expansion in basic goods, intermediate goods and consumer durables," she added.

However, she said that nevertheless, all the six sub-sectors recorded an improving trend on a sequential basis, which is encouraging.

The continued divergence between the growth of consumer durables and non durables clouds an assessment of the strength of the pickup in end-user demand.

The uptick in the growth of infrastructure/construction goods to a 56 month high benefitted from the double-digit expansion in steel and cement output.

"Manufacturing growth is expected to remain robust in December 2017, benefiting from a favourable base effect, as well as the robust expansion displayed by sectors such as automobiles. However, the subdued performance of electricity generation and the output of Coal India Limited may weigh upon the growth of mining and electricity in December 2017," added Nayar while giving an outlook going forward. (ANI)

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