The macro-economic indicators announced on Friday were termed as a mixed bag by India Inc as on one hand a rise in food and fuel prices pushed India's annual retail inflation rate by 5.2 per cent in December while, on the other, optimism sprang on robust 8.4 per cent growth of factory production for November.
According to State Bank of India's Ecowrap report, the base effect led consumer price index-based (CPI) inflation to a 17-month high in December 2017.
"The overall CPI inflation came moderately above the core inflation in November 2017 after remaining below the core-CPI for 15 straight months. The policy makers may rather look through the cycle of inflation data and not at point of cycle of the inflation data," the report said.
"Also, with growth just picking up we expect RBI to stay on a prolonged pause in FY19," it added.
Deloitte India's Senior Economist Richa Gupta pointed out that the CPI inflation "is likely to inch up in the coming months".
"The current print is unlikely to lead to any major change in the RBI's stance in the near term as inflation is likely to head downwards in the second half of the year once the unfavourable base effects wane," she added.
As per the data furnished by the Ministry of Statistics and Programme Implementation, December's CPI inflation rose to 5.21 per cent from 4.88 per cent in November.
Conversely, another macro-economic indicator -- Index of Industrial Product -- showed an exponential rise in the manufacturing output which lifted India's factory production by over 8 per cent in November from a rise of 1.99 per cent in October and a 5.1 per cent growth during the corresponding period of 2016-17.
"Industrial production seems to have picked up in November to a multiyear high on the back of restocking along with some improvement in demand due to festive demand," Anis Chakravarty, lead economist, Deloitte India.
"That said, rural demand still seems subdued as shown by consumer durables production and is unlikely to rebound in the near term," he added.
Brokerage firm Angel Broking Research Analyst Jaikishan J Parmar said: "While the base effect is a major explanation for the sharp rise in IIP, there are two key positive takeaways for the markets. Firstly, cement has emerged as a key contributor to the IIP growth and that promises positive downstream impact."