India’s Industrial Output Grows 3.1 Percent in September Amid Rising Inflation

According to the data released by the National Statistics Office (NSO), Index of Industrial Production or IIP showed a superb performance with 3.1 per cent growth in September unlike the preceding month, as all three major segments such as mining, manufacturing and power generation showed improvement. However, the growth in the industrial output during the month was lower than 6.4 per cent registered in September 2023.

The factory output had turned negative in August at (-) 0.1 per cent, mainly on account of floods affecting mining operations in the different parts of the country. “The mining sector output grew by 0.2 per cent, manufacturing production by 3.9 per cent and electricity output by 0.5 per cent in the month of September 2024,” the NSO said in a statement.

In August, the mining sector output contracted by 4.3 per cent and power generation by 3.7 per cent and the growth in manufacturing too was muted at 1.1 per cent. “The IIP growth rate for the month of September 2024 is 3.1 per cent which was (-) 0.1 per cent in the month of August 2024,” the NSO said.

During April-September 2024-25, the IIP growth was 4 per cent lower than 6.2 per cent in the year ago. As per the use-based classification released by the NSO, the capital goods segment growth decelerated to 2.8 per cent in September 2024 from 8.4 per cent in the year-ago month, while consumer non-durables output grew by 2 per cent against a growth of 2.7 per cent in September 2023.

Commenting on the data, Aditi Nayar, chief economist, ICRA said that the IIP expanded by 3.1 per cent on a year-on-year basis in September 2024 after declining by 0.1 per cent in August 2024, amid a favourable base. “The uptick was broad-based with all the use-based segments witnessing an improvement in their year-on-year growth in September 2024 vis-à-vis August 2024,” Ms Nayar said.

For retail inflation, the NSO said in a separate release that it breached the RBI’s upper tolerance level, soaring to a 14-month high of 6.21 per cent in October mainly on account of rising food prices. Inflation based on the consumer price index or CPI was 5.49 per cent in September and 4.87 per cent in the year-ago month.

The RBI that mainly factors in the CPI while arriving at its bi-monthly monetary policy, has been tasked by the government to ensure retail inflation remains at 4 per cent with a margin of 2 per cent on either side. “The inflation in the food basket increased to 10.87 per cent in October, compared to 9.24 per cent in September and 6.61 per cent in October 2023,” the NSO said.

“Year-on-year inflation rate based on All India CPI for the month of October 2024 is 6.21 per cent. Corresponding inflation rates for rural and urban areas are 6.68 per cent and 5.62 per cent, respectively,” the NSO added.

The NSO data further showed that during October 2024 significant decline in inflation was observed in the 'pulses and products', eggs, 'sugar and confectionery' and spices subgroups. “High food inflation in October 2024 is mainly due to increase in inflation of vegetables, fruits and oils and fats,” the NSO said.