The country's industrial output growth slowed to 3.4% in June, while retail inflation inched to nearly 8% in July , posing fresh challenges for policymakers, who are battling to revive growth and tame inflation.
Industrial output in June rose 3.4% year-on-year from a decline of 1.8% in June 2013 and slower than the upwardly revised 5% expansion in May 2014. Separate data showed retail inflation rose 7.96% in July , compared to previous month's 7.46%, largely driven by pressure on fruits, vegetables and beverages prices. Retail inflation is close to the Reserve Bank of India's target of keeping it at 8% by January 2015.
Economists said although the factory data for June was disappointing but the overall picture showed some recovery, though not a significant turnaround. The Narendra Modi government has vowed to steer the economy out of two consecutive years of sub 5% growth.
Inflation continued to be a concern, particularly stubborn prices of some food products. Vegetables prices grew an 16.88% in July, while fruits shot up 22.48%. Overall food and beverages prices rose 9.16%, close to the double-digit mark. The government may need to keep a close watch on the segment, considering the uncertainty over monsoon rains.
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