

NEW DELHI: In a double whammy for the government, retail inflation soared to a nine-month high of 11.24 per cent and factory output shrank 1.8 per cent, developments that may prompt the Reserve Bank to further increase a key interest rate next week.

Official data released on Thursday showed inflation as measured by the consumer price index (CPI) crossing the 11 per cent mark in November on account of costlier vegetables and fruits such as onions and tomatoes.

The index of industrial production (IIP) contracted in October after three months, mainly due to poor performances in manufacturing, mining and consumer durables.

Commenting on inflation, RBI governor Raghuram Rajan said, "I think monetary policy also has a role to play in trying to balance demand and supply. Again, as I said, we are aware of the weak economy but we also have to take into account inflationary pressure."

The RBI, scheduled to review the monetary policy on December 18, hiked the key lending rate by 0.25 per cent in each of it previous two policy reviews to contain inflation.

Costlier fruits and vegetables such as onions and tomatoes pushed retail inflation to a nine-month high of 11.24 per cent in November, making it harder for the Reserve Bank to lower interest rates.

Inflation as measured by the consumer price index (CPI) for October was revised upwards to 10.17 per cent from the preliminary estimate of 10.09 per cent.

Vegetable prices rose 61.6 per cent in November from a year earlier, compared with a 45.67 per cent increase in the previous month, according to government data released today. Fruit prices rose 15 per cent.

Pulses were dearer by 1.2 per cent, cereals by 12.07 per cent and milk products by 9.06 per cent in November. The price rise of protein-rich items such as eggs, meat and fish was 11.96 per cent.

Inflation in the food and beverages segment was 14.72 per cent compared with 12.56 per cent in the previous month.

Inflation, which was in double digits for several months until March, declined to 9.39 per cent in April and came back to double digits in October.

The data showed that the provisional inflation rates for rural and urban areas for November were 11.74 per cent and 10.5 per cent, respectively.

For CPI inflation, price data are collected from select towns by the National Sample Survey Organization and from certain villages by the department of posts.

Data on inflation based on the wholesale price index is scheduled to be released on Monday.

The Reserve Bank, scheduled to announce its monetary policy review on December 18, hiked the key lending rate by 0.25 per cent at each of its previous two policy reviews to contain inflation.

RBI governor Raghuram Rajan on Wednesday said the central bank will look into all economic data while deciding on the policy rate.

Industrial production contracts by 1.8 per cent in October

Industrial production entered the negative territory after three months, contracting by 1.8 per cent in October this year mainly due to poor performance of the manufacturing sector.

Factory output, as measured in terms of the IIP, grew by 8.4 per cent in October last year.

Meanwhile, IIP growth for September this year has been revised marginally to 1.96 per cent from the provisional estimate of 2 per cent.

IIP dipped by 1.8 per cent in June, 2013. According to data released by the government, industrial output for April-October period remained flat as compared to 1.2 per cent in the same period of 2012-13.

The manufacturing sector, which constitutes over 75 per cent of the index, declined by 2 per cent in October as against a growth of 9.9 per cent a year ago.

During April-October, the sector's output contracted 0.3 per cent compared to a growth of 1.1 per cent in same period last year.

The mining sector, with a weight of about 14 per cent in IIP, also saw a contraction of 3.5 per cent in October as against a dip of 0.2 per cent in the same month last fiscal.

During April-October, the output shrank by 2.7 per cent as against a contraction of one per cent.

Power generation, however, posted a growth of 1.3 per cent in the month under review compared to 5.5 per cent a year ago. Expansion in power generation was at 5.3 per cent in April-October as compared to 4.7 per cent in the same period last year.

In terms of industries, 10 out of 22 industry groups in the manufacturing sector have shown negative growth during the month of October.

