News Worms
News Worms

IIP grows by 8%; inflation by 5.2%

IIP grows by 8%; inflation by 5.2%

The Fed raised interest rates three times in 2017.

Food inflation, as measured by the Consumer Food Price Index, rose to 4.96 per cent in December from 4.35 per cent in the previous month.

India's industrial output hit a 25-month in November, soaring 8.4 percent led by robust growth in manufacturing, as well as inventory rebuilding after the festive season.

Core consumer inflation topped expectations by rising 0.3% in December against the previous month, the fastest pace since January past year.

The consumer-price index rose just 0.1% from November, but core prices jumped 0.3%, the most in 11 months.

Economists were hoping that a tightening labour market, rising commodity prices and a weak dollar would lift inflation toward the Federal Reserve's 2% target in 2018. Prices excluding food and energy were up 1.8% relative to last month's increase of 1.7%.

The dollar fell to a session low against a basket of currencies after the data. US crude futures settled up 0.8 percent at $64.30 a barrel, not far below $64.77 set on Thursday, which was the highest level since late 2014. The Index of Industrial Production (IIP) had grown at 2 per cent in October 2017 and by 5.1 per cent in November 2016. Owners' equivalent rent of primary residence climbed 0.3 percent after gaining 0.2 percent in November. It increased borrowing costs three times in 2017.

In a separate report on Friday, the Commerce Department said retail sales rose 0.4 per cent last month.

Meanwhile, used auto and truck prices jumped 1.4% in the month, while new vehicle prices gained 0.6%.

However, other industry observers pointed out that low base effect of the November 2016 due to demonetisation measure also had a role to play in the upward trajectory of industrial production and retail inflation. "The indexes for apparel, airline fares, and tobacco all declined over the month", said the Labor Department.

Capital goods output, which is a barometer of investment, grew by 9.4 per cent in November as against 5.3 per cent a year ago.

Excluding automobiles, gasoline, building materials and food services, retail sales increased 0.3 per cent last month after an upwardly revised 1.4 per cent surge in November.

Earlier this month, Finance Minister had told Parliament that the inflation had increased owing to a seasonal rise in vegetable prices and the higher house rent allowances disbursed to government employees under the 7th Pay Commission recommendations.


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