Expert views - Consumer inflation accelerates, industrial output falls

MUMBAI (Reuters) - India's annual consumer price inflation edged up for a fifth consecutive month to 5.61 percent in December from a year earlier, matching analyst expectations on the back of rising food prices, government data showed on Tuesday.

Meanwhile, separate data showed India's annual industrial output contracted 3.2 percent in November.

COMMENTARY

MADHAVI ARORA, ECONOMIST AT KOTAK MAHINDRA BANK, MUMBAI

"There was some upside negative surprise on a broad-based food inflation. However correction in global oil and food prices will counter the impact of the upside risks to inflation.

"Given the global disinflationary forces strengthened in the last one month with respect to oil and food prices, we expect the RBI to cut the repo rate early next fiscal year.

"However, RBI rate cuts will also be subject to the fiscal consolidation path the government announces in the budget and the mix of fiscal stimuli will be important for the RBI to decide on further rate cuts."

ABHISHEK UPADHYAY, ECONOMIST AT ICICI SECURITIES PRIMARY DEALERSHIP LTD, MUMBAI

"A modest increase in food and core inflation led to retail inflation edging higher, in line with our expectations.

"Underlying inflation trend remains comfortable, with core inflation remaining sub-5 percent. Pressures in food inflation also remain narrowly concentrated - mainly in pulses and the high frequency data does suggest some relief on that count also.

"The January-March inflation is tracking close to RBI estimate of 5.8 percent. While recent sharp declines in crude prices add to our conviction on scope for a residual cut in the repo rate, RBI is likely to wait for clarity on the government's fiscal stance before deciding on such a move."

INDRANIL PAN, CHIEF ECONOMIST, IDFC BANK, MUMBAI

"On the IIP (industrial output), most on the street got it wrong. Nobody was expecting a negative number. We were, however, on the lower side of the spectrum at about 1.4 percent only.

"I think the erosion has been more on the manufacturing side, maybe due to the production loss that happened on account of rains in Chennai.

"To a certain extent the 9.6 percent (IIP growth) of last month was not sustainable. It's a clear give back of that. Now it will not continue to be in the negative zone, but it will also not go back to the 9 percent zone. It should be more in the 2-3 percent zone for a bit of time."

SIDDHARTHA SANYAL, INDIA ECONOMIST, BARCLAYS, MUMBAI

"Broadly, the inflation trajectory looks benign going ahead.

"Food price management will be key going ahead. We expect food inflation to stay anchored given that it is not widespread, and is a factor of only a few food items.

"There is a fresh weakness in global commodity prices and we expect some pass through of that in lower oil prices in India. We continue to expect RBI to cut the repo rate two more times by a total of 50 basis points by mid-2016."

(Reporting by Suvashree Dey Choudhury and Karen Rebelo; Compiled by Rafael Nam)