Two Bad

The pace of industrial production growth slumped to a three-month low in January while the inflation that the consumer experiences accelerated in February, raising worries among economists on the strength of India's economic recovery.
The immediate impact of the downbeat data could be on interest rate, as economists say the central bank may now pause on its rate easing cycle. The Reserve Bank of India has cut the key policy rate twice since the beginning of 2015, and there were indications for further easing through the year.
The index of industrial production (IIP) rose 2.6% in January against an upwardly revised 3.2% in the previous month.
Separately released consumer price index (CPI), the primary price gauge followed by the central bank, showed a 5.37% increase in February, compared with 5.19% in January, mainly due to higher food prices.
The data points are a double whammy of sorts for an economy that, thanks to revised national accounts numbers, is possibly growing at the fastest rate among all major economies.
The manufacturing sector that has a 75% weight in IIP grew by just 3.3%. Production of consumer durables fell 5.3% in January from a year earlier, indicating still fragile sentiment. Consumer non-durables, or FMCG goods, fell 0.1%.
As many as seven out of the 22 manufacturing sub-sectors shrank. Mobile phones were the top contributor to the contraction, with output falling by 58% during the month, essentially due to the shutdown of Nokia's Chennai plant.
Mining output fell 2.8%, while electricity generation rose a modest 2.7%.
The first 10 months of the current fiscal year saw industrial growth of 2.5%, against 0.1% in the corresponding period of 2013-14.
The only silver lining in the data was a 12.8% rise in the production of capital goods, marking a third successive month of growth and indicating some pick up in investment activity.
The slower growth in industrial production is not consistent with the projected 7.5% rise in gross domestic in the current fiscal year based on the revised methodology put out by the statistics office.
Manufacturing is pegged to grow 6.8% in fiscal 2015, according to the GDP estimate.However, the IIP and GDP numbers are not strictly comparable as the former measures quantity of production while the latter captures value added.
Meanwhile, the third successive month of higher inflation will make it difficult for the RBI to follow up with more monetary easing, after cutting the policy twice, by a quarter percentage point each, to stimulate the economy.
CPI index underwent a base year revision from 2010 to 2012 last month. The new index showed vegetable price inflation shot up to 13% in February versus 9% in January.
Meanwhile, industry sought more rate cuts despite the uptick in inflation.