Expert views - Indian consumer inflation accelerates; factory output jumps

MUMBAI (Reuters) - India's annual consumer price inflation quickened to 4.41 percent in September from a year earlier, compared to an annualised 3.66 percent in August, government data showed on Monday.

That was slightly above analyst forecasts for consumer inflation of 4.3 percent.

At the same time separate data showed industrial output grew a better-than-expected 6.4 percent in August compared with a downwardly revised 4.1 percent growth in July.

ABHISHEK UPADHYAY, ECONOMIST, ICICI SECURITIES PRIMARY DEALERSHIP, MUMBAI

"Improvement in IIP (industrial output) growth was anticipated on account of revival in mining and electricity growth seen in the core sector numbers released earlier.

"But there seems to have been a strong sequential increase in manufacturing growth as well, after adjusting for seasonality. This contrasts with the decline in the same metric seen last month, and should be construed favourably as it indicates a pick-up in capacity utilization levels, which is a prerequisite for recovery in the capex cycle.

"We still expect only a gradual recovery in industrial output in months ahead, with external demand likely to be a drag.

"The latest number is more evidence that food price pressures are staying contained. Core inflation increased marginally but should not raise much concern. In all, the outturn supports the case for inflation undershooting the RBI forecast for January 2016 of 5.8 percent.

"While that should not imply any immediate easing in December, given that RBI frontloaded the easing and is now awaiting transmission, sustained favourable surprises can open up space for a residual cut in 2016."

TIRTHANKAR PATNAIK, INDIA STRATEGIST, MIZUHO BANK, MUMBAI

"The CPI number is largely on par, although food inflation has marginally gone up, which was also expected given onion and pulses prices had gone up.

"Given that there was a sharp fall in last year's September number, this time the positive base effect has worn off.

"We don't expect any change in RBI's policy stance."

SONAL VARMA, INDIA ECONOMIST AT NOMURA, MUMBAI

"Within CPI there is some pressure building up in food price inflation, but still it's lower than our expectation.

"IIP (industrial output) is a surprise and there are some volatile components in the data like cable and inflated rubber.

"Overall IIP number has been inching higher and this could be a bit exaggerated. The trend of recovery in growth continues, and macro environment is good with inflation under control. We don't expect any change in the RBI's stance."

(Reporting by Suvashree Choudhury; Compiled by Rafael Nam)