India's inflation quickens, industrial output growth slows

India's consumer inflation rose slightly last month while industrial production growth slowed in December, according to new figures released Thursday, days after the country sharply raised its annual growth forecast.
India on Monday predicted its economy would grow by 7.4 percent this financial year up to March, a marked improvement on earlier estimates issued under a revised formula for calculating gross domestic product.
Analysts however said Thursday's figures indicated Indian industry was struggling to regain momentum after a long economic slowdown.
Production by India's factories, mines and utilities grew by 1.7 percent in December, just less than half the 3.8-percent growth recorded in November.
The dip in output was a dampener for the right-wing government of Prime Minister Narendra Modi, who came to power last May promising to reignite flagging growth and create much-needed jobs.
Earlier in the day, Indian Finance Minister Arun Jaitley said Asia's third-largest economy had recovered from past challenges and was now "positioned to take off at a much faster pace".
But Modi has struggled to push key economic reforms through parliament, and his party this week suffered its first major electoral setback in Delhi state polls.
Despite the continued slump in global crude oil prices, consumer inflation rose to 5.11 percent year-on-year in January, up slightly from 5.0 percent in December.
The Federation of Indian Chambers of Commerce and Industry put the onus on the Reserve Bank of India, saying "further lowering of interest rates by RBI is needed to boost consumer and investment sentiments".
The central bank has been under pressure from the government and markets to cut high interest rates to improve economic growth, but governor Raghuram Rajan has insisted on first winning the battle against inflation.
Rajan kept rates unchanged earlier this month, saying he was waiting for further signs of slowing inflation along with "high-quality fiscal consolidation", with the government's budget due to be delivered on February 28.
Shilan Shah, an economist at London-based Capital Economics said the January figure was still comfortably below the RBI's inflation target of 5.5 percent.
"In all, today's data point to increasing slack in the economy," said Shah.
"As such, while the revised GDP data suggest that the economy is growing much faster than previously thought, the case for further policy loosening remains intact."