New Delhi: With seven month low industrial output in May and five month high retail inflation in June, the Central Statistics Office data indicates twin trouble for macro-economic environment.
Index of Industrial Production (IIP) grew at 3.2 percent in May from 4.8 per cent in the previous month while the Consumer Price Index (CPI) based inflation touched 5 per cent in June against 4.87 per cent in the preceding month.
High crude oil prices, weakening rupee and recent increase in minimum support price (MSP) of kharif crops by the government are further expected to mount pressure on retail inflation.
The Reserve Bank of India (RBI) on 6 June raised the repo rate by 25 basis points to 6.25%—the first rate hike in more than four years.
Though the Indian Meteorological Department has projected a normal monsoon, an adverse report on monsoon or a further increase in crude prices could lead to rate hike in coming monetary policy review.
Slowdown in manufacturing sector led to the decline in industrial growth. Of the 23 industry groups in the sector ten have registered negative growth.