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Business Standard
17 hours ago
- Business
- Business Standard
Core sectors' growth plunges to a 9-month low of 0.7% in May 2025
Output growth in India's eight core infrastructure industries plummeted to a nine-month low of 0.7 per cent in May from an upwardly revised figure of 1 per cent in April, with half the sectors clocking sharp contractions. Electricity generation contracted for the first time in nine months, with a 5.8 per cent drop that marked the sharpest downturn since June 2020. Crude oil output dipped 1.8 per cent, shrinking for the fifth straight month. Fertilisers production contracted for the second month in a row, with May's 5.9 per cent drop being the sharpest since February 2024, while natural gas output (-3.6 per cent) shrank for the 11th successive month. On the positive side, growth in cement production accelerated to 9.2 per cent in May, recovering from April's six-month low uptick of 6.3 per cent. Steel output also picked up pace and grew 6.7 per cent during the month, compared to a revised 4.4 per cent uptick recorded in April, which was the weakest in seven months. 'Clearly, the pick-up in infrastructure activity has aided steel production. Demand from construction and auto besides capital goods would account for this increase. Cement too did very well, which is reflective of the government activity in the capex space,' said Bank of Baroda chief economist Madan Sabnavis. Coal production growth decelerated a tad to 2.8 per cent from 3.5 per cent in April, while refinery products output grew 1.1 per cent in May after a 4.5 per cent contraction in the previous month. The eight core sectors constitute 40.27 per cent of the Index of Industrial Production (IIP), which had fallen to an eight-month low of 2.7 per cent in April from an upward revised figure of 3.94 per cent in March. Economists now expect industrial output growth to drop to 1.5 - 2 per cent in May. Base effects also affected last month's growth print, as the Index of Core Industries (ICI) had risen 6.9 per cent in May 2024, which was the highest in the past 13 months. 'Excess rains in the latter part of May 2025, owing to the early onset of the monsoon, likely weighed on the performance of the electricity and some of the mining sectors in the month. However, the YoY performance of the steel, cement, refinery products and crude oil sectors improved in May 2025 vis-à-vis April 2025, partly offsetting the deterioration in the performance of the other sectors,' said Rahul Agrawal, senior economist, ICRA Ratings.
Hans India
4 days ago
- Business
- Hans India
WPI inflation slides to 14-mth low of 0.39% in May
New Delhi: Wholesaleprice inflation (WPI) declined to a 14-month low of 0.39 per cent in May on easing prices of food articles and fuel, and experts said geopolitical tensions could push up inflation was 0.85 per cent in April. It was 2.74 per cent in May last year. In a statement, the industry ministry said the inflation in May was in positive zone primarily due to 'increase in prices of manufacture of food products, electricity, other manufacturing, chemicals and chemical products, manufacture of other transport equipment and non-food articles'. According to the WPI data, food articles saw a deflation of 1.56 per cent in May, against a deflation of 0.86 per cent in April, with vegetables, onion, potato and pulses seeing negative inflation. Deflation in vegetables was 21.62 per cent in May, compared to 18.26 per cent in April. Fuel and power, too, saw a deflation of 2.27 pc in May, compared to a 2.18 per cent inflation in April. Manufactured products, however, saw positive inflation at 2.04 per cent, compared to 2.62 per cent in April. The Reserve Bank of India (RBI) mainly takes into account retail inflation while formulating monetary policy. Data released last week showed retail inflation eased to over six-year low of 2.82 per cent in May mainly due to subdued food prices. The RBI this month cut benchmark policy interest rates by a sharp 0.50 per cent to 5.50 per cent amid easing inflation. The RBI has cut inflation projections for the current fiscal year to 3.7 per cent from the earlier estimate of 4 per cent, as it expects core inflation to remain benign with the easing of international commodity prices. The sub-4 per cent average retail inflation projection is the lowest in recent years. ICRA Senior Economist Rahul Agrawal said the cooling in WPI was broad-based, with the food, non-food manufacturing, minerals, and fuel and power segments contributing to the dip in headline print between these months. Notwithstanding the early onset of southwest monsoon, its progress halted in early-June, with a significant lag of 31 per cent over the normal levels up to June 15, 2025. The temporal and spatial distribution of the monsoon remains key for crop outlook, and consequently, food inflation, Agarwal said.
Hans India
5 days ago
- Business
- Hans India
Softening of WPI inflation to propel economy on higher growth path: Economists
The continued softening of wholesale price index (WPI) inflation since December 2024 is a positive signal for higher economic growth in India, economists said on Monday, adding that they expect WPI inflation to remain benign in the coming months, assuming geopolitical tensions abate. The annual rate of inflation based on the WPI eased further to a 14-month low of 0.39 per cent in May this year from 0.85 per cent in April and 2.05 per cent in March, according to the Ministry of Commerce and Industry data. PHDCCI President Hemant Jain said this was largely driven by a significant reduction in the prices of primary articles, fuel and power, as well as manufactured product categories. "This downtrend in wholesale inflation will boost business sentiment as it will result in reduced costs of production," he added. The fall in prices of food articles from (-)0.86 per cent to (-)1.56 per cent, petrol from 7.70 per cent to (-)8.49 per cent, and manufactured products from 2.62 per cent to 2.04 per cent from April to May, respectively, are significantly contributing to the softening of WPI inflation. ICRA's senior economist Rahul Agrawal said that aided by a favourable base, the WPI inflation expectedly flattened further to a 14-month low of 0.4 per cent in May 2025 from 0.9 per cent in April 2025, printing somewhat lower than ICRA's estimate (+0.7 per cent) for the month. "The cooling was broad-based, with the food, non-food manufacturing, minerals, and fuel and power segments contributing to the dip in the headline print between these months. Notably, the WPI food inflation print slumped to 1.7 per cent in May 2025, the lowest in 19 months, amid the subdued sequential uptick in prices," he added. As many as 20 of the 22 food items for which data is released by the Department of Consumer Affairs reported an easing in their annual inflation rate in June (until June 15) compared to May, partly aided by a favourable base. "Given these trends, ICRA expects the WPI-food inflation to soften further in June 2025 from 1.7 per cent in May 2025," he noted.
Mint
5 days ago
- Business
- Mint
India's wholesale inflation drops to 14-month low in May
New Delhi: According to provisional data, India's wholesale price index-based inflation fell to a 14-month low of 0.39% in May, down from 0.85% in the previous month. A favourable base aided the drop in the annual rate of inflation based on the All India Wholesale Price Index (WPI), with the food, non-food manufacturing, minerals, and fuel and power segments contributing to the dip in the headline print. The wholesale price index (WPI), a proxy for producers' prices, stood at 2.25% in March, 2.38% in February and 2.51% in January, data released by the ministry of commerce and industry on Monday said. The latest wholesale inflation came in below expectations, with prices rising less than the 0.8% projected by economists in a Reuters poll. According to economists, lower food prices led the moderation, with wholesale food inflation falling to 1.72% in May. The decline was also mirrored across non-food manufacturing, minerals, and fuel and power, which collectively dragged down the headline number. "As many as 20 of the 22 food items for which data is released by the Department of Consumer Affairs, reported an easing in their YoY inflation rate in June 2025 (until 15 June) compared to May 2025, partly aided by a favourable base," said Rahul Agrawal, Senior Economist, Icra Ltd. "Given these trends, ICRA expects the WPI-food inflation to soften further in June 2025 from 1.7% in May 2025," Agrawal added. Meanwhile, expectations of a normal monsoon and a rebound in rabi sowing have raised hopes of improved agricultural output, potentially easing food prices further in the coming months. Data showed prices of primary articles, which comprise food items such as cereals, vegetables, eggs, meat and fish, as well as non-food articles such as crude petroleum and natural gas declined year-on-year, with inflation in this category slipping to negative territory. Pulses saw negative inflation of 10.41% year-on-year, vegetables saw 21.62%, and potatoes recorded 29.42%. In May, non-food article prices rose 1.53%, while crude petroleum and natural gas fell 12.43%. Fuel and power prices declined 2.27%, and manufactured goods saw a 2.04% rise. "On the macroeconomic front, CPI inflation has also been easing in recent months, gradually strengthening the case for a more accommodative stance by the RBI and raising the possibility of deeper rate cuts than we currently anticipate in the second half of the year," said Sankar Chakraborti, MD & CEO, Acuité Ratings & Research Limited. "Looking ahead, while the current inflation trajectory is a welcome development, volatility in global markets and economies and unpredictable weather patterns due to El Niño remain the risks to be monitored," Chakraborti added. To be sure, India's retail inflation cooled to its lowest level in over six years in May, helped by a sharp moderation in food prices, according to provisional government data released last week. Consumer price index (CPI)-based inflation eased to 2.82% year-on-year, down from 3.16% in April and 4.8% in May last year, data from the Ministry of Statistics and Programme Implementation (MoSPI) showed. This marks the fourth consecutive month of sub-4% inflation, the longest such streak in at least five years. Meanwhile, earlier in June, the Reserve Bank India's (RBI) Monetary Policy Committee cut the repo rate by 50 basis points to 5.5%, its third straight cut and a cumulative reduction of 100 basis points since the easing cycle began in February. The move signals a possible pivot from inflation control to supporting growth. Regulating interest rates is a key instrument for the central bank to control inflation. A higher interest rate regime makes borrowing costs more expensive, which can reduce demand among banks, other financial institutions and even the general public to borrow money. Reducing the supply of money in the market can also bring down consumer spending.
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Business Standard
14-05-2025
- Business
- Business Standard
WPI inflation falls to 13-month low in April as food, fuel become cheaper
Inflation based on the wholesale price index (WPI) declined to a 13-month low of 0.85 per cent in April from 2.05 per cent in March, on the back of a dip in the prices of food and fuel and power. Price rise also decelerated in the manufactured products category, according to data released by the Ministry of Commerce and Industry on Wednesday. Prices of primary food articles witnessed a deflation after 27 months (of -0.86 per cent). The trend was led by the sharpest declines in the prices of vegetables (-18.26 per cent) since October 2023 and pulses (-5.6 per cent) since October 2018. Potato prices declined 24.3 per cent. Protein-rich food like eggs, meat and fish declined by 0.29 per cent – the first time it happened so since October 2024. Onion price increased 0.2 per cent in April, the slowest in 22 months. Price rise for other food items like paddy (1.87 per cent), cereals (3.81 per cent), fruits (8.38 per cent) and wheat (7.41 per cent) decelerated, too. Easing food inflation is expected to give relief to households and help consumption demand in FY25. Rahul Agrawal, senior economist at ICRA Ratings, said that WPI inflation is expected to soften further in May, aided by a favourable base and trends in wholesale prices of essential food items. Fuel and power prices declined by 2.2 per cent in April. Deceleration in global commodity prices, especially of mineral oils, led to a decline in the prices of kerosene, air turbine fuel and petrol. The prices of petrol (-7.7 per cent) and high speed diesel (-5.04 per cent) declined for the 11th and 24th month straight. Cooking gas price dipped (-0.41 per cent) for the first time since April 2024. Among manufactured products, prices of cement, lime and plaster continued in deflation (-1.42 per cent) for the 16th month straight. Prices of basic metals dipped (-0.64 per cent). The price rise of other major manufactured goods like textiles (0.52 per cent), apparel (0.65 per cent), paper and paper products (2.1 per cent), pharmaceuticals (0.98 per cent), semi-furnished steel (0.25 per cent) and food products (9.51 per cent) decelerated in April. However, the price rise for manufactured vegetable and animal oils, despite deceleration remained in double digit (28.7 per cent) during April. ALSO READ: Paras Jasrai, associate director at India Ratings and Research, said that the decline in manufactured products' prices was broad based as core inflation moderated after increasing for six months. Manufactured products' prices were at a three-month low of 1.3 per cent in April as base metal prices declined. 'The temporary lowering of tariffs by the US and China helps in controlling the heightened uncertainty and volatility. Muted commodity prices along with a favorable base effect for the food segment would keep the wholesale inflation around 0.5 per cent in the near term,' he said. The drop in WPI inflation comes a day after India's retail inflation moderated to nearly six-year low of 3.16 per cent, aided by a double-digit dip in vegetable prices and the deepest decline in pulses prices in over six years. 'This dual disinflation offers a substantial macroeconomic tailwind, with the pricing environment favorable for rural consumption recovery. This strengthens the case for future rate cuts - a move that will lower borrowing costs, revive capex appetite among corporates and offer rate sensitive sectors a timely boost,' said Mahendra Patil, managing partner, MP Financial Services.
