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NEW DELHI: Driven by rising food prices and higher pay for government employees, December retail inflation shot up to 17-month high of 5.2 per cent, government data showed on Friday. The retail inflation stood at 4.88 per cent in the month of October.

While the price rise may trouble the common man, there is reason to cheer on the macroeconomic front as November IIP (Index of Industrial Production), or factory growth shot up to an impressive 8.4 per cent from a lowly 2.2 per cent in the month of October. The IIP data comes as a pleasant surprise as most of the analysts had predicted it to come around 4 per cent. The cumulative growth for the period April-November 2017 over the corresponding period of the previous year stands at 3.2 per cent. The manufacturing sector recorded the strongest uptrend, growing by more than 10 per cent as compared to the same period last year.

The inflation has now picked up for three consecutive months as it stood at 3.58 per cent in October and 4.88 per cent in November. The uptick in inflation is in expectation as a Reuters poll of 40 economists had predicted the inflation to come at 5.10 per cent.

The surge in inflation and fiscal deficit confirms RBI's (reserve Bank of India) concern which made it keep the policy rates intact at 6 per cent in December. The inflation in fact has overshot RBI projections which had slightly raised its medium term target to cap inflation at 4.3 to 4.7 per cent for the remaining of the fiscal.



In Video: November IIP rises to 26-month high of 8.4%