The Index of Industrial Production (IIP) growth was subdued at 1.7% year on year (yoy) in December compared with 3.9% in November on slow growth in mining and electricity segments.

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The consumer price inflation (CPI) for January with the new base year of 2011-12 came at 5.11% yoy as compared with 4.28% yoy growth in December (new base year).

The cumulative IIP growth from April-December was 2.1%.

The Central Statistical Organisation (CSO) has changed the base year for CPI from 2009-10 and broadened the item basket for calculating urban as well as rural inflation.

The new base year adopted by the CSO has been welcomed by analysts, terming it to be methodologically robust.

Among the three sectors which constitute the IIP, manufacturing and electricity grew 2.1% and 4.8% while mining contracted 3.2% in December 2014.

The November 2014 IIP growth stood at 3.9% yoy. Experts believe that industrial activity is generally weak in December as result of the overall demand remaining weak.

Saugata Bhattacharya, Chief Economist Axis Bank said industrial activity was up in November 2014 partially because of base effects caused by Dusherra and Diwali festivals.

"In December, output growth was down partially due to lower exports, which also hit overall demand," he said.

The growth in consumer durables segment fell 9%, indicating a slowdown in demand, while consumer non-durables growth remained flat.

Sujan Hajra, chief economist, Anand Rathi Financials, said the drop in IIP was slightly more than expected and he remained averse about comparing a subdued IIP numbers with the robust GDP as the base for IIP hasn't been changed.

RBI had expected CPI to be at 8% in January 2015 and 6% in January 2016, thus the CPI at current levels has been a positive sign.

"CPI at 5.11 is below expectation as it was expected to be 5.5% and we maintain an average CPI of 5% in the next 12 months," Hajra said.

IIP numbers unlike GDP are generally volatile as it they take into account finished projects and not the capital work in progress. Thus, in case of sectors having long gestation period like capital goods the numbers fluctuate depending on the completion of the job.

The RBI in its February monetary policy review had said it will need to review the revised inflation and other growth data before cutting rates. Experts believe that a change in rate can be expected in the April monetary policy review as the inflation data for February and the IIP data for January will be released by then.

Sandeep Raina, AVP- research, Edelweiss Financial Services, said it's too early for the stock market to react on the inflation and IIP numbers and it will wait for the budget, expecting important policy announcements which will pave the way for a growth in industrial activity.