Consumer price or retail inflation in November eased to a record low of 4.38 per cent from 5.52 per cent in October, but industrial output in October fell sharply by 4.2 per cent in October, government data showed on Friday. A cooling off in food prices accompanied by a sharp drop in global crude oil prices and high base effect contributed to the fall in inflation, analysts said.

Crude oil prices have dropped over 40 per cent since July, lowering India's import bill and reducing government spending on fuel subsidies.

Industrial output, on the other hand unexpectedly contracted, dragged down by a fall in the manufacturing and the capital goods sector. Analysts polled by Reuters had expected the output to grow 2.80 per cent.

Industrial production was upwardly revised to 2.8 per cent year-on-year in September from 2.50 per cent earlier.



November's inflation data and slowing of factory output will be a shot in the arm for those who want the Reserve Bank to cut rates quickly to stimulate growth. Last week, RBI Governor Raghuram Rajan had held out prospects for a cut in the policy interest rate - currently set at 8.0 per cent - early next year if inflation trends are favourable and the government controls its fiscal deficit.



Despite the improvement in inflation, the data suggests a lack of momentum in India's recovery from its weakest phase of economic growth since the 1980s.





With growth struggling at 5.3 per cent in the July-September quarter, it is likely to be some time before the country recaptures the 8 per cent growth levels needed to create enough jobs for a rapidly expanding workforce, analysts say.(With inputs from Reuters)