Factory output down, inflation rises to 5.5%

IF ECONOMY DOES NOT SHOW SIGNS OF AN UPTICK IN DECEMBER QUARTER, RBI MAY HAVE TO GIVE MONETARY STIMULUS, EXPERTS SAY

NEWDELHI: India’s industrial output shrank while inflation swelled, official data released on Thursday showed, highlighting challengesforpolicymakersbattling an economic slowdown amid surging food prices.

Factory output contracted 3.8% in October after shrinking 4.3% in September, in sharp contrast with an 8.4% expansion in Octoberlastyear.Retailinflation continuedtosurgeinNovember, fuelled by soaring food prices, as prolongedrainsdampenedvegetable supplies.

Experts said that if economic growthdoesnotshowsignsofan uptick in the December quarter, the Reserve Bank of India (RBI) maycomeunderpressuretogive further monetary stimulus to support the economy, given the fact that retailinflation isdriven by food prices and is not across the board. Vegetable prices surged 36% in November from a year ago, data released by the

National showed.

Retailinflationsurged5.54%in Novemberasfoodpriceinflation measuredbytheConsumerFood Price Index rose 10% in November from 7.89% in October.

TheRBIhascutitsbenchmark repo rate five times in a row this year,butkepttherateunchanged at its December 5 monetary policy review as retail inflation remained firm and the impact of the rate cut so far has remained muted. India’s economy grew 4.5% in the second quarter, its slowest pace since March 2013.

Statistics

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