India's retail inflation rises to 7% in August; July IIP tumbles to 2.4%

India's retail inflation has been above RBI's upper tolerance limit of 6% for eight consecutive months

India's retail inflation inched up to 7% in August from 6.71% in July mainly due to higher food prices, government data showed on Monday.

The consumer price index-based inflation is above the Reserve Bank's comfort level of 6% for the eighth month in a row.

According to the data, inflation in food basket was 7.62% in August, up from 6.69% in July and 3.11% in August 2021.

The rate of price rise was in excess of 10 per cent in case of vegetables, spices, footwear, and 'fuel and light' on annual basis.

However, there was contraction in inflation in egg and almost flat in protein rich 'meat and fish' during the month.

Meanwhile, India's industrial production rose 2.4% in July, according to the official data released on Monday. The IIP had grown 11.5% in July 2021.

As per the Index of Industrial Production (IIP) data released by the National Statistical Office (NSO), the manufacturing sector's output grew 3.2% in July 2022.

The mining output contracted 3.3% while power generation increased 2.3% during the same period.

In April 2020, industrial production had contracted 57.3% due to a decline in economic activities in the wake of the lockdown imposed to curb the spread of coronavirus infections.

Food inflation, which accounts for nearly half the CPI basket, soared as prices of essential crops like wheat, rice and pulses were driven higher by a record heatwave, squeezing household budgets.

While high inflation is a global phenomenon, it is felt acutely in a country like India where millions live in abject poverty.

The power sector showed a growth of 2.3% as against 11.1% a year ago. The mining sector witnessed a contraction of 3.3% in July 2022 whereas there was a growth of 19.5% in the year-ago period.

During April-July this year, IIP rose 10% as against 33.9% growth in the same period a year ago.

Capital goods output, which is a barometer of investments, rose 5.8% in July 2022 as against 30.3% growth in the year-ago month.

The consumer durables segment grew 2.4% compared to 19.4% growth a year ago.

The primary goods segment, which accounts for nearly 34% of the index, expanded 2.5% in July compared to 12.4% growth in the year-ago period.