By Ruma Dubey

It was a mixed picture this time around. The IIP for Jan’14, driven mainly by capital goods sector, came in at 2.6%, up from 1.7% in Dec, which was much better than expected. On the other hand, CPI for Feb’14 was at 5.37%, up from 5.11% in Jan. This is a clear indication that the sweetness of monsoon is going and the heat is expected to catch on soon.

The noteworthy fact this time around was that the Central Statistical Organisation (CSO) started using 2012 as the new base year, replacing 2010 for measuring all retail prices. On the other hand, the price index was revamped, lowering the weight for food and fuel.

The CPI has risen consecutively for the fourth time and this is worrisome, if not expected. The unseasonal rains are only expected to push up the prices further. The price rise this time too was led by food inflation, up at 6.7% and in this, it was vegetables which registered the sharpest spike.  Rural Inflation was at 5.79% v/s 5.34% (MoM) whereas urban remained flat.

In IIP, Mining, showed a degrowth of 2.8%, Manufacturing rose 3.3% and Electricity was up 2.7%. The cumulative growth in the three sectors during April-January 2014-15 over the corresponding period of 2013-14 has been 1.3%, 1.7% and 9.3% respectively. Capital goods production rose to 12.8% from a degrowth of 3.9% (YoY). Though the worry lines continue to come from consumer durables which contracted 5.3% and intermediate goods declined 0.5%. This means that consumer demand, which actually drives an economy has not really started picking up; it continues to actually flounder.

14 out of the 22 industry groups in the manufacturing sector have shown positive growth during the month of January 2015 as compared to the corresponding month of the previous year. The industry group ‘Electrical machinery and apparatus n.e.c.’ has shown the highest positive growth of 28.1%, followed by 23.5% in ‘Furniture; manufacturing n.e.c.’ and 15.3% in ‘Rubber and plastics products’. On the other hand, the industry group ‘Radio, TV and communication equipment & apparatus’ has shown the highest negative growth of (-) 51.3%, followed by (-) 35.1% in ‘Office, accounting & computing machinery’ and (-) 9.7% in ‘Fabricated metal products, except machinery & equipment’.

Important items showing high positive growth during the current month over the same month in previous year include ‘H R Sheets’ (343.0%), ‘Polythene bags including HDPE & LDPE bags’ (161.6%), ‘Woollen Carpets’ (84.5%), ‘Conductor, Aluminium’ (69.7%), ‘Stainless/ alloy steel’ (68.5%), ‘Gems and Jewellery’ (44.4%), ‘Plastic Machinery including Moulding Machinery’ (41.1%), ‘PVC Pipes and Tubes’ (41.0%), ‘Cable, Rubber Insulated’ (39.5%), ‘Carbon Steel’ (29.4%), ‘Rice’ (25.6%), ‘Air Conditioner (Room)’ (23.4%) and ‘Boilers’ (20.8%).

Important items showing high negative growth are: ‘Electric Sheets’ [(-) 61.5%], ‘Telephone Instruments (incl. Mobile Phones & Accessories)’ [(-) 57.9%], ‘Heat Exchangers’ [(-) 44.4%], ‘Ship Building & Repairs’ [(-) 42.0%], ‘Tractors (complete)’ [(-) 40.6%], ‘Computers’ [(-) 39.7%], ‘Steel Structures’ [(-) 34.2%], ‘Generator/ Alternator’ [(-) 23.4%], ‘Wood Furniture’ [(-) 22.7%] and ‘Colour TV Sets’ [(-) 20.6%].

The numbers are out and these would no longer not have too much relevance for the market as the RBI has already taken its decision and thus we do not have to wager whether rates will come down in April or not. It’s good that RBI did not wait for these CPI numbers to cut rates, maybe then it might not have happened! And obviously, nothing will happen now in April. It will be just another market day!