Double Whammy

India's industrial output contracted in November, its sharpest decline in four years, while retail inflation inched up in December on the back of an increase in prices of some food items, piling fresh pressure on authorities trying to revive growth. The index of industrial production (IIP) fell an annual 3.2% in November compared to an upwardly revised 9.9% in October and an expansion of 4% in November 2014. The decline was the sharpest since October 2011.
Economists said the sharp fall in output could be due to the impact of the Chennai floods and the shortened work days due to several festivals during the month. Industrial output data has remained volatile but the sharp decline should worry policy makers who are hoping for a revival in growth.
The capital goods sector, a barometer of industrial activity fell an annual 24.4% in November compared to an expansion of 7% in the year-ago period. The consumer durables sector held its ground growing an annual 12.5% in November compared to a contraction of 14.5% in a year earlier.

Inflation, measured by the consumer price index, edged up for the fifth consecutive month to an annual 5.6% in December, from November's 5.4%.
According to ratings agency Crisil, higher inflation was driven by a near 40-basis-point jump in food inflation -mainly sugar, meat, fish and vegetables -and higher fuel inflation led by the hike in excise duty last month. The food price index rose an annual 6.4% in December from 6% in November largely driven by an increase of 58.3% increase in price of pulses during the month.  Accordingly , the RBI is expected to remain watchful in its forthcoming monetary policy . CPI inflation for the remaining months is estimated at 5.5%,“ he said.