New Delhi: Diminishing hopes of another rate cut by the Reserve Bank, retail inflation rose to 5.37 per cent in February, the third consecutive month of uptick, even as industrial output grew by modest 2.6 per cent in January.
According to data released by the Central Statistics Office (CSO), growth in industrial production was however lower than revised figure of 3.23 per cent in December 2014.
It is higher than 1.1 per cent in January last year.
The improvement in factory output, measured in terms of Index of Industrial Production (IIP), was primarily on better performance by the manufacturing sector which accounts of 75 per cent of the index.
Inflation remains a worry with the third straight increase in February due to costlier food items, including vegetables and beverages.
Retail inflation measured in terms of Consumer Price Index (CPI) rose to three month high of 5.37 per cent in February, up from 5.19 per cent in January. It had risen to 5 per cent in December last year.
Cheering IIP numbers, the industry asked the RBI not be swayed by slight uptick in inflation and should continue to moderate interest rates to push growth.
CII director general Chandrajit Banerjee said: "There is marginal uptick in CPI inflation over the previous month.
"But this should not dissuade the RBI from continuing with its rate easing cycle to support growth in the forthcoming monetary policy announcement in April, especially as the performance of consumer durables continues to be muted and inflation is within the comfort zone of the RBI."
The Reserve Bank of India has cut policy rate by 0.50 per cent in the last two months to 7.5 per cent. The central bank is widely expected to go for another another cut in its monetary policy review meet slated for April 7.
It may be noted that the International Monetary Fund (IMF) in its annual assessment report has suggested that India should keep its monetary policy tight as underlying inflationary pressures and upside risks remain.
On IIP front, manufacturing in January showed a marked improvement at 3.3 per cent that comes after several months of sluggishness. In the same month a year ago, manufacturing out grew by 0.3 per cent.
For April-January period, the sector saw an output growth of 1.7 per cent, compared to a contraction of 0.3 per cent in the year-ago period.
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