India’s factory output surged to a 16-month high of 8.2% year-on-year in October, beating the projection of a sub-5% growth rate as both consumer goods and machinery output surged. In October last year, the index of industrial production contracted by 5%. While expectations of an economic rebound grew, retail inflation rose again close to double-digit levels, delaying hopes of an interest rate cut that could fan the sails of growth.

Experts linked the growth to robust demand for consumer durables in the festive season and a base effect stemming from a lacklustre show previous year. But they are still cautious on the rebound.

Finance minister P Chidambaram, however, saw “green shoots” of a rebound in the economy. “Investments are taking place, capacity is being created and consumption is happening in consumer durables and non-durables.”

In other data released Wednesday, retail price inflation inched up to 9.9% in November from 9.75% previous year, hitting hopes of an interest rate cut at the RBI policy review on December 18.