India industry output grows at 3.4pc

August 13, 2014 - 12:00:00 am

NEW DELHI: India said yesterday industrial output expanded by an unexpectedly slow 3.4 percent in June from a year earlier while inflation accelerated, dimming prospects of a quick economic recovery.

The growth in output by India’s mines, factories and utilities marked the third straight month of industrial expansion in Asia’s third-largest economy.

But the 3.4-percent annual growth in June undershot market forecasts of a 5.2-percent rise and was lower than the 4.7 percent increase logged in May.

In other bad news for the new right-wing government, hoping to steer the country out of its longest period of sub-five percent growth in a quarter-century, consumer price inflation also picked up pace.

Consumer prices rose 7.96 percent in July from a year earlier, far above the six-percent target set by the hawkish central bank and exceeding the previous month’s revised 7.46-percent rise.

The higher-than-expected consumer inflation means that the central bank will have less room to ease high interest rates to spur economic growth.

The economy grew by 4.7 percent in the financial year to March 2014, its second consecutive year of sub-five-percent growth.