India's Juy Industrial Output Shot Past Projections

India’s industrial output grew 13.8 percent in July — far more than expected — rebounding from a 13-month low in June and adding to pressure on the central bank to hike interest rates to curb inflation.

Manufacturing, which has the greatest weight in India’s index of industrial production, grew 15.0 percent during the month, up from 7.3 percent in June, the government said Friday. Capital goods output surged 63.0 percent and consumer durables production grew 22.1 percent over last July.

A CNBC-TV18 poll of analysts had forecast growth of 7.9 percent. The government revised down June’s industrial output growth from 7.1 percent to 5.8 percent. Such downward revisions are common.

India’s central bank faces the difficult task of balancing sharp inflation and a booming domestic economy with an uncertain global economy, which could hit export-dependent manufacturers and draw risk-averse foreign capital away from India.

The Reserve Bank of India has hiked key interest rates four times this year, which economists say is now just starting to cool inflation. But good rains and a bumper harvest still haven’t brought food costs under control and strong demand is creating supply constraints in key sectors like autos.

Moody’s economist Bodhi Ganguli said the Reserve Bank of India will likely raise key rates by a quarter of a percentage point at its meeting next Thursday.

“Inflation expectations have also been anchored in recent weeks, but it is too soon to declare inflation under control as upward pressures persist,” Ganguli said in a report released Friday. “Food prices remain abnormally high.”

Food inflation rose to 11.5 percent in the week ending August 28th, up from 10.9 percent the week before.

ERIKA KINETZ, AP Business Writer MUMBAI, India