Inflation slips, factory output slows; rate cut hope brightens

Retail inflation eased to four-month low of 4.87 per cent in April while industrial output slowed to a five-month low of 2.1 per cent in March, raising hopes for an interest rate cut by the RBI.
Retail inflation in April inched down to a four-month low of 4.87 per cent as prices of food items, vegetables and fruits turned cheaper.
On the other hand, factory output, as measured by the Index of Industrial Production (IIP), contracted by 0.5 per cent in March 2014, according to government data released today.
The twin macro-economic indicators strengthen government and industry's call to Reserve Bank of India Governor Raghuram Rajan to cut interest rates.

RBI is scheduled to review its monetary policy on June 2.
Commenting on the data, CII Director General Chandrajit Banerjee said, "CII hopes this (easing inflation) would provide the requisite space to RBI to continue with its rate easing cycle in its forthcoming monetary policy announcement to provide a fillip to growth and also encourage banks to reduce rates."

Besides, Ficci President Jyotsna Suri said,"... The (manufacturing) growth remains tepid. Critical constraints for the sector like high interest rates, infrastructure bottlenecks, low domestic and export demand are an area of concerns... And may continue to impact growth of the sector in coming months."

According to the data released by Central Statistics Office, industrial production grew at 2.8 per cent in 2014-15 as against a contraction of 0.1 per cent in 2013-14.
Meanwhile, IIP for February has been revised downwards by CSO to 4.86 per cent from the provisional estimate of 5 per cent released last month.
The IIP had grown at 2.77 per cent in January, 3.56 per cent in December and 5.2 per cent in November, respectively.
The factory output contracted by 2.7 per cent in October.