Double whammy

In a double setback for the Indian economy, retail inflation spiked in April while industrial growth stagnated, denting chances of a rate cut by the Reserve Bank of India in the June review.
The two sets of numbers showed the Index of Industrial Production rose only 0.1% in March, while higher food and fuel prices drove retail inflation to 5.39% in April compared with 4.83% in March.
Industrial production growth was 2.4% in all of 2015-16 compared with 2.8% in the previous financial year
The contraction in the IIP in December was revised to 0.9% from 1.2%.
Retail inflation picked up in April for the first time since January . RBI chief Raghuram Rajan aims to cap retail inflation at 5% by March 2017. The pace of price gains in April was driven by higher food costs. An early summer heat wave led to a 34% increase in prices of pulses, which fuelled the 6.21% rise in food prices.
The numbers suggest that the central bank may not cut interest rates at its June 7 policy review.
Manufacturing and mining contracted 1.2% and 0.1%, respectively, in March, although electricity generation rose 11.3%.A 15.4% contraction in the capital goods sector indicate the continued weakness of investment demand in the economy.
Consumer non-durables production fell 4.4%, while output of durables rose 8.7%, highlighting the rural-urban divide.

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