India's factory output soars to a 25-month high in November

India's factory output soars to a 25-month high in November

India's factory output soars to a 25-month high in November

The inflation has now picked up for three consecutive months - it stood at 3.58 per cent in October and 4.88 per cent in November.

The core inflation reading, which consumer prices excluding food and energy, rose 0.3% in December from November but rose 1.8% from the December 2016 reading.

The inflation data's significance lies in the fact that it influences the level at which the US Federal Reserve sets interest rates, which in turn has a major impact on the US Dollar.

Underlying US consumer prices recorded their largest increase in 11 months in December amid strong gains in the cost of rental accommodation and healthcare, bolstering expectations that inflation will gain momentum in 2018.

The PPI data came on the heels of a report on Wednesday showing a sharp moderation in import prices in December.

For the full year, CPI rose 2.1 percent, the same as 2016, while core CPI slowed, posting a 1.8 percent increase after the 2.2 gain in the previous year.

"The data is consistent with the view of the Fed on inflation, which is that weakness in growth before was due to transitory factors", said Lewis Alexander, chief economist at Nomura Securities International NY, who had projected a 0.3 percent monthly gain in core prices.

Earlier this month, Finance Minister had told Parliament that the inflation had increased owing to a seasonal rise in vegetable prices and the higher house rent allowances disbursed to government employees under the 7th Pay Commission recommendations. With tightening labor market, rising commodity prices, a weak dollar, and tax cuts stimulus, the inflation index has been heading towards the Fed's 2 percent target. Including all items, the broader CPI showed a smaller gain in December in line with estimates, as energy prices declined, a Labor Department report showed Friday.

Last month, the price of services fell 0.2 percent after rising for nine straight months.

The Fed raised interest rates three times in 2017. In the same month past year, growth was 1.5 percent. The nationwide average for gas is $2.52, up from $2.35 a year ago, according to AAA.

Similarly, consumer non-durables' output rose by 23.1 per cent, and that of consumer durables by 2.5 per cent.

PHD Chamber President Anil Khaitan said that as the teething problems of GST are nearly over, the growth in industrial output has come with a strong rebound and it looks forward to the growth becoming stronger in the coming quarters.

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