Diminishing hopes of another rate cut by the Central Bank of India, retail inflation rose to 5.37 per cent in February, the third consecutive month of uptick, even as industrial output grew by modest 2.6 per cent in January.
According to data released by India’s Statistics Office, growth in industrial production was however lower than revised figure of 3.23 per cent in December 2014.
It is higher than 1.1 per cent in January last year.
The improvement in factory output, measured in terms of Index of Industrial Production (IIP), was primarily on better performance by the manufacturing sector which accounts of 75 per cent of the index.
Inflation remains a worry with the third straight increase in February due to costlier food items, including vegetables and beverages.
Retail inflation measured in terms of Consumer Price Index (CPI) rose to three month high of 5.37 per cent in February, up from 5.19 per cent in January. It had risen to 5 per cent in December last year.
The International Monetary Fund (IMF) in its annual assessment report has suggested that India should keep its monetary policy tight as underlying inflationary pressures and upside risks remain.
On IIP front, manufacturing in January showed a marked improvement at 3.3 per cent that comes after several months of sluggishness.
For April-January period, the sector saw an output growth of 1.7 per cent, compared to a contraction of 0.3 per cent in the year-ago period.