Question

Read the following passage and answer the question
Recent macro-economic data, including the official Index of Eight Core Industries for November and S&P Global’s survey-based Purchasing Managers’ Index (PMI) for the manufacturing and services sectors for December, offer mixed signals on the underlying momentum in the economy. The government’s provisional data show that output across the core industries, spanning coal to electricity, grew by an average 5.4% year-on-year in November. Double-digit expansions in cement, coal, electricity and steel led the index higher. However, on a sequential basis, contractions in six of the eight sectors, including in the heavyweight sectors of electricity and refinery products, which together represent almost half the index, kept average core output unchanged. While electricity output shrank 2.1% from October, refinery products contracted by 3.1% sequentially. Only production of coal and cement expanded both year-on-year and month-on-month, signalling that non-power demand for coal and construction activity may have begun gaining some traction in the third fiscal quarter. The uptrend in cement is heartening as consumption of the key building material spans the job-intensive housing and infrastructure segments and, if sustained, could help undergird broader economic momentum. The 12.3% year-on-year and 15.1% sequential expansion in coal output is also a positive augury as it indicates an improvement in availability of the fuel to fire captive power plants and furnaces in the crucial process and metal-making industries. Separately, the more up-to-date December PMI data show that manufacturing momentum strengthened appreciably as businesses reported the fastest rise in new orders since February 2021. The private survey of purchasing managers at about 400 manufacturers signalled that average output growth across these firms hit a 13-month high last month, with the PMI reading of 57.8 pointing to the strongest sectoral expansion since October 2020. Producers of goods stepped up hiring to help them meet a backlog of orders. And though the increase in jobs was the slowest since September, employment across the sector rose for a tenth straight month reflecting the heightened optimism among manufacturers. The PMI survey shows that overall output charge inflation across the private sector has intensified, with manufacturers reporting inflation in selling prices outpacing gains in input costs for the first time in almost two-and-a-half years. Policymakers can illafford to drop their guard on inflation at this stage.
The increasing manufacturing growth might lead to …………………………

• A. Increasing inflation
• B. Decreasing inflation
• C. No effect on inflation
• D. Uncertain effect on inflation

Answer 1

The Correct Option is A

The correct option is (A): Increasing inflation