Consumption-driven demand and seasonal factors pushed India's factory output higher - but retail inflation also rose along with, official data showed on Tuesday.
Inflation in August jumped to its joint-highest level since the vote to leave the European Union previous year, as Brexit continues to push up the cost of living in the UK.
Daily consumables like fruits and vegetables turned costlier during the month with inflation print coming at 5.29 per cent and 6.16 per cent, respectively as against 2.83 per cent and (-) 3.57 per cent in July, according to the data released by the Central Statistics Office (CSO).
The output rose by 1.2 per cent as compared to the same month of past year.
Markets are hopeful that the uptick in inflation will place more pressure on the Bank of England (BoE) to start tightening monetary policy, as the continual rise in prices erodes consumer spending power and weakens the UK's all important service sector. It has slipped from 4.5 per cent in the corresponding period, a year ago.
In contrast, the IIP had expanded by 4.5 per cent during July of 2016.
Manufacturing sector, which constitutes over 77 percent of the index, showed a growth of 0.1 percent in July as compared to a growth of 5.3 percent in the same month past year. "If states choose to implement salary and allowance increases similar to the centre in the current financial year, headline inflation could rise by an additional estimated 100 basis points above the baseline over 18-24 months".
On a month-on-month basis, the CPI rose 0.97 percent in August with a 1.30 percent increase in food prices.
Other notable categories such as milk-based products became dearer by 3.58 per cent and meat and fish recorded a rise of 2.94 per cent.
"CPI remains well above the Bank of England's 2% target and we expect it to remain above target throughout the third and fourth quarters of 2017".
Food and beverages during the month under review recorded a rise of 1.96 per cent over the same month past year.
Markets were upbeat as the most powerful storm in Atlantic history was downgraded, with analysts suggesting that the worst case estimates of damage are unlikely to come to pass after Irma changed course and missed the cities of Miama and Tampa.
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