New Delhi: Retail inflation inched up for the fifth consecutive month and industrial output contracted by 3.2% in December, according to figures released by the government Tuesday. The Consumer Price Index ( CPI) rose to 5.61% in December mainly on costlier vegetables and cereals.
As per data on index of industrial production (IIP) released by the Central Statistics Office, the country's factory output declined by 3.19 percent in November, due mainly to a (-)4.4 percent drop in manufacturing activity.
The cumulative growth of the country's factory output was also pulled down to 3.9 percent in the first eight months of the current fiscal year from 4.8 percent for the first seven months.
Between the other broader indices, electricity production was up marginally by 0.7 percent, while that for mining was at 2.3 percent.
The cumulative growth of the two indices for the first eight months of the current fiscal were 4.6 percent and 2.1 percent. Manufacturing's cumulative growth stood at 3.9 percent.
These figures lower the headroom for RBI to lower key lending rates this month.
Food inflation too rose to 6.40 per cent during the month, government data released on Tuesday showed. Retail inflation measured by the consumer price index (CPI) was at 5.41 per cent in November 2015 and 4.28 per cent in December 2014.
Retail prices of cereals and products moved up by 2.12 per cent in December, from 1.7 per cent in November. The growth in prices in meat and fish stood out at 6.57 per cent as against 5.34 per cent in November while that of eggs was at 0.97 per cent, from 0.5 per cent in the previous month.
The prices of protein-rich items such as meat, fish and eggs generally go up during the winter as demand spikes. However, seasonal fruits turned cheaper in December, with inflation print at 0.64 per cent although vegetables prices grew 4.63 per cent. Pulses continue to pose a big challenge for policymakers as the rate of price growth stood at 45.92 per cent, only marginally down from 46.08 per cent in November.
Retail inflation in the oil and fats category moved up to 7.06 per cent while that of fuel and light, it was 5.45 per cent. "We are not surprised as this is a very sticky consumer inflation, but is well within the RBI target of 6 per cent. Once the base effect comes into play, I see a downward trend in CPI and a very strong case for interest rates coming down," Yes Bank CEO and MD Rana Kapoor told reporters..
The Reserve Bank keeps track of retail inflation to decide on its bi-monthly monetary policy. The next meet is due on February 2. The apex bank has been targeting 6 per cent inflation target by January 2016.
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