After demonetization, industry saw a huge decline in growth as growth rate for December 2016 was recorded at 2.4%.
"Exports likely continued to grow at double digits for the third consecutive month, supported by robust global demand and favourable base effects", it said.
British inflation unexpectedly held close to its highest level in almost six years in January, highlighting the challenge facing the Bank of England and reinforcing expectations of a rise in interest rates in May.
Economists had predicted a drop to 2.9 per cent, offering a reprieve for consumers, but downward pressure from motor fuel prices and slowing food price inflation was offset by a shallower fall in leisure costs.
"We expect headline inflation to be at 5.1 per cent in the fourth quarter (January-March), including the impact of HRA (house rent allowance) to central employees, up from the 4.6 per cent in Q3", RBI Governor Urjit Patel told reporters in Mumbai after the release of the monetary policy review. Consumer non-durables expanded by 16.5 per cent in December.
This morning the Office of National Statistics confirmed the Consumer Prices Index (CPI) 12-month rate was 3.0% in January, unchanged from December. "The 8.4 per cent growth in November is possibly no flash in the pan and a six-plus per cent growth in December as per the SBI Index can not be ruled out", Ghosh said. As per use-based classification, the growth rates in December 2017 over December 2016 are 3.7 per cent in primary goods, 6.2 per cent in intermediate goods and 6.7 per cent in infrastructure/construction goods. "Dece-mber growth showed not only a robust year on year growth but also a strong sequential improvement in the industrial activity", said rating agency Crisil. Within the food items, the inflation fell for vegetables to 26.97%, sugar and confectionery 2.85%, cereals and products 2.33% and fruits 6.24%.
Analysts have already made an assumption IIP to come lower in comparison with month-on-month performance, where the factory output jumped to 5-year high in November 2017.
Fuel and light inflation stood at 7.58 percent compared with 7.90 percent in December, while housing inflation stood at 8.33 percent from 8.25 percent in the previous month.
The Retail Prices Index (RPI), a separate measure of inflation, edged lower to 4.0% last month from 4.1% in December.