In what could be the early signs of an industrial turnaround, factory output for November 2014 came in at a five-month high of 3.8 per cent on the back of improved manufacturing performance. This is a clear positive for the economy given that the Index of Industrial Production (IIP) had contracted 4.2 per cent in October 2014.

Manufacturing — which has 75 per cent weightage in IIP — grew 3 per cent in November, compared with a contraction of 2.6 per cent in October.

For April-November 2014, IIP recorded 2.2 per cent growth, higher than 0.1 per cent in same period in the previous year.

Meanwhile, retail inflation for December 2014 came in at 5 per cent, higher than the 4.3 per cent in November, official data released on Monday showed.

Inflation surged as prices of some food items, including fruits and vegetables, increased. Food inflation rose to 4.78 per cent in December, from 3.14 per cent in previous month,

Acceleration in consumer price inflation and improved factory output performance could ease the pressure on the RBI Governor Raghuram Rajan to cut interest rates before the upcoming Budget in end February, say economy watchers.

However, industry bodies such as CII and Assocham were quick to note that retail inflation had only increased “marginally” and this should not be a reason for the RBI to delay its interest rate cut plans.

Focus on growth According to CII, this marginal rise in retail inflation should not prevent the RBI from cutting benchmark interest rates and moving in lockstep with the Government to put the focus back on growth.

This assumes importance as investments have not shown a significant pick-up and consumer durables continue to show a muted performance.

Anis Chakravarty, Senior Director, Deloitte in India, expressed doubt over the IIP momentum sustaining in the near future.

“Consumer demand is yet to see any meaningful pick up as durables production continued to contract,” he said.

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