A barely growing manufacturing sector and a surging inflation dealt a double-whammy to the economy.

Retail inflation surged to 6.07 per cent in July, overshooting the government and central bank’s comfort zone of 5 per cent, even as manufacturing growth remained almost standstill at 0.9 per cent in June.

Yet, the Index of Industrial Production (IIP) grew 2.1 per cent, led by robust growth in electricity and mining sectors. According to official data released on Friday, IIP’s cumulative growth between April and June was 0.6 per cent against 3.3 per cent in the year-ago period.

While electricity and mining grew 8.3 per cent and 4.7 per cent, respectively, in June, amongst use-based industries, capital goods production dipped 16.5 per cent. Basic and intermediate goods grew 5.9 per cent and 6.1 per cent, respectively.

Consumer goods production rose 2.8 per cent in June, led by a rise in durable goods that expanded 5.6 per cent. The consumer non-durable goods, however, recorded low growth of 1 per cent.

“Revival of investment demand remains an area of concern as reflected in the steep decline of the capital goods sector in the first quarter,” said industry body FICCI.

Retail inflation

More worrying was the Consumer Price Index-based inflation jumping to 6.07 per cent in July against 5.77 per cent a month ago, led by higher food prices.

Food price inflation rose to 8.35 per cent in July against 7.79 per cent a month ago. It was a mere 2.15 per cent in July 2015. CPI inflation in pulses (27.53 per cent), sugar (21.91 per cent) and vegetables (14.06 per cent) remained in double-digits.

Despite calls for a rate cut to spur industrial growth, the Reserve Bank of India had left the repo rate unchanged in the monetary policy review on August 9 as it was concerned with retail inflation ruling above its projection of around 5 per cent for the fiscal.