CPI inflation soars to 11.24%; factory output contracts to 4 month low
"Provisional annual inflation rate based on all India general CPI (Combined) for November 2013 on point to point basis (November 2013 over November 2012) is 11.24% as compared to 10.17% (final) for the previous month of October 2013," a government release stated.
In a double whammy, the index for industrial porduction contracted more then expected and came in at a -1.8 per cent for Oct 2013, as compared to Oct 2012.
The Indices of Industrial Production for the Mining, Manufacturing and Electricity sectors for the month of October 2013 stand at 118.1, 178.8 and 162.6 respectively, with the corresponding growth rates of (-) 3.5%, (-) 2.0% and 1.3% as compared to October 2012 (Statement I). The cumulative growth in the three sectors during April-October 2013-14 over the corresponding period of 2012-13 has been (-) 2.7%, (-) 0.3% and 5.3% respectively.
The RBI now faces a perfect dilemma when it meets for its Monetary Policy review on Dec 18. On one hand it has to battle falling industrial production, while on the other hand it has to raise interest rates to fight inflation.
Analysts now look at the possibility of interest rates being hiked by even 50 basis points, as the RBI battles inflation.
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