Indian industrial output slow

economy is losing steam after a string of interest rate hikes.
The 5,6 percent growth in production by factories, mines and utilities was the weakest in nine months and sharply undershot analysts’ projections of 8,5 percent expansion.
And with inflation at nine percent and price pressures spreading from food and energy to manufacturing, analysts forecast the central bank would have to raise interest rates again later this month.
The hike would be the 11th since March 2010.
“The central bank has made it quite clear it is prepared for lower growth in pursuit of lower inflation,” Brian Jackson, senior emerging markets strategist at Royal Bank of Canada in Hong Kong, told AFP.
Jackson forecast a 25 basis point hike when the central bank meets on July 26 and a total 50 basis points increase through the financial quarter to September.
Analysts expect inflation of near 10 percent when June figures are released tomorrow.
India’s May’s output figure was down from 8,5 percent in the same month a year ago, and a revised 5,8 percent in April.
The data spelled more bad news for Premier Manmohan Singh, who yesterday reshuffled his Congress-led government after months of bad publicity over corruption scandals.
Finance Minister Pranab Mukherjee said the numbers were “not encouraging” and added that the government was seeking to boost the manufacturing sector, which accounts for over 75 percent of the industrial production index. Manufacturing expanded just 5,6 percent in May, down from 8,9 per cent a year earlier. – AFP.