Are antacids and digestive enzymes really powering IIP growth?
Month after month, the press release on the Index of Industrial Production (IIP) puts the item ‘Digestive enzymes and antacids (including PPI drugs)’ as the highest positive contributor to growth in the index.
As the chart alongside (based on data taken from press releases issued by the Central Statistics Office) shows, it contributed 1.39 percentage points to IIP growth in July, when overall IIP growth was a mere 1.2%. In other words, if “digestive enzymes and antacids (including PPI drugs)” had remained at the same level as a year ago, then, if the data is correct, growth in industrial production for July 2017 would be negative. PPI, incidentally, stands for proton pump inhibitors, medicines that reduce gastric acid production.
Is it really true that practically the entire growth in industrial production in recent months is due to antacids and related medicines, as is seen in the accompanying chart? The mystery deepens even more because the weight of this category in IIP is a mere 0.22%, which means growth in these products must be huge to make a difference to overall IIP.
This overwhelming importance of antacids to industrial growth made its appearance after the revision of the IIP base year to 2011-12. The category now occupies the same exalted status that “rubber-insulated cables” did in the earlier IIP series, which too contributed a huge amount to industrial growth. The anomaly in the old series has been replaced by a new one in the current IIP series.