India’s factory output jumped to 8.4% in November and retail inflation rose to 5.21% in December, confirming the prospects of sustained economic recovery and growing risks of inflation. The Index of Industrial Production was 2.2% in October. The retail inflation, based on Consumer Price Index (CPI), was 4.88% in November. In December 2015, it was 3.41%.
This is the final set of data that finance minister Arun Jaitley will have as he finalises the Budget for 2018-19 to be presented on February 1.According to Bloomberg analysts’ estimate, the IIP will accelerate to 4% in November from 2.2% a month ago, while CPI will cross the 5%-mark at 5.04% in December from 4.88% a month ago. The statistics office last Friday projected the economy to slow to 6.5% in 2017-18 from 7.1% a year ago while maintaining that growth will accelerate to 7% in the second half of the year (October-March) from 6% in the first half (April-September). The economy has been hurt by the lingering impact of demonetization and disruptions caused by GST.
Merchandise exports grew at a six-year high of 30.5% in November while the index for eight core sectors constituting 41% of IIP expanded at its fastest pace in 13 months at 6.8% during the same month. In November, passenger vehicle sales grew at 14.3%, the fastest pace since July, on the back of a low base effect due to the demonetization of high-value banknotes in November 2016.
The Nikkei India manufacturing Purchasing Managers’ Index (PMI) rose at the fastest rate in five years in December to 54.7 from 52.6 in the previous month. A reading above 50 denotes expansion and one below it signals contraction.
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