A Double Whammy

There was no letup in bad news for the government on the economic front. Amid the debate over slowing economic growth, data released by the Central Statistics Office showed that industrial output fell 0.6% in December, posing fresh policy challenges.
It was the second successive month of decline for factory growth which has remained anaemic due to a string of factors, including high interest rates, slowing global economy, stubborn inflation and delay in policy approvals. The November figure was revised downwards to a decline of 0.8% from the previously estimated 0.1% expansion.
Adding to the worry of policymakers is the stubborn retail inflation led by a spike in food prices. Retail inflation continued to remain in double digits in January, rising an annual 10.79%. It stood at 10.56% in December. The prices of food and beverages rose an annual 13.36% in January while vegetable prices shot up 26.11%.
The disappointing figures come against the backdrop of the raging debate over the strength of the economy. The Central Statistics Office has forecast the GDP growth to be 5% in 2012-13, the slowest pace of growth in a decade, while the finance ministry has insisted that the economy will grow by 5.5% or slightly more in the current financial year.