India sees sharp increase in industrial production, inflation contained

NEW DELHI – A sharp upwards spurt in August industrial production (IP) stole the show from economic data released in India today. “The 6.4% outcome – the highest in nearly three years – was clearing encouraging, although not as broad based as we would have liked,” ANZ Bank said in a client note.

 “While we’ve been careful of reading too much into the often volatile monthly variations of IP data, given the outdated base year, the trend is clearly one of improvement and hence some optimism is warranted on growth.”
The drivers were capital goods up 21.8% y/y (-3.6% July) and consumer durables at 17% y/y (16% July).
“That inflation remains contained within RBI’s projections in a weak monsoon year is the other welcome development. The RBI however is likely to stick to keeping rates unchanged in the near-term given the ‘frontloaded’ 50bps cut last month.”

ANZ says  RBI is likely to keep rates unchanged after its front-loaded 50bps cut last month.  www.live.anz.com (ATI).