IIP reaches 6-mth peak, inflation also surges

India’s factory output showed an expansion in April to reach a six-month peak. Statistics from NSO show that the index of industrial production (IIP) expanded at a rate of 3.4% in April compared to 0.3% a month ago. But retail inflation has also accelerated by 3.05% in May, the fastest rate in seven months as compared to 2.99% in the previous month. Inflation is still within the limits set by the RBI and there is still room for rate cuts. However analysts caution that the factory output rise could be misleading given the volatility in some components like capital goods. Moreover, the Indian economy slowed to a five-year low of 5.8% during the quarter ending March 2019.