While inflation abated mildly in August, data showed industrial output was flat in July pointing to the need for a rate cut by the Reserve Bank of India to spur industrial activity.
Industrial activity, measured in terms of the Index of Industrial Production (IIP), grew 0.5 per cent in the month of July over the same month of the previous year, government data showed. India's retail inflation slowed down to 7.8 per cent in August from 7.96 per cent in the previous month.
The July industrial growth compares unfavourably with the 3.9 per cent recorded in the previous month, the Central Statistics Office data showed.
The cumulative growth for the period April-July of fiscal 2014 -15 over the corresponding period of the previous year stands at 3.3 per cent. The drop in July is mainly due to the lower output in consumer goods. Consumer goods output contracted by 7.4 per cent year-on-year, while consumer durables output declined by 20.9 per cent. Consumer non-durables, however, grew 2.9 per cent compared to 0.1 per cent month-on-month.
While manufacturing activity contracted 1 per cent, as against the growth of 1.8 per cent in the previous month, the mining sector recorded 2.1 per cent growth versus 4.3 per cent.
The cumulative growth during April-July 2014-15 over the corresponding period of 2013-14 has been 2.8 per cent in mining, 2.3 per cent in manufacturing and 11.4 per cent in electricity.
Retail inflation based on Consumer Price Index (CPI) slowed down to 7.8 per cent in August from 7.96 per cent in the previous month, helped by slower increases in fuel, light and clothes prices, government data showed. The CPI urban inflation stood at 7.04 per cent in August, while CPI rural inflation was at 8.35 per cent.
Retail food inflation rose to 9.42 percent in August compared to 9.36 percent in July.
For rural areas, retail food inflation was recorded at 9.83 percent, while for urban areas it stood at 8.40 per cent, according to data released by the Central Statistics Office.
Commenting on the data, industry chamber FICCI president Sidharth Birla said in a statement: "While we were hoping that slowdown in manufacturing had bottomed out, it appears from July numbers that manufacturing may not be out of the woods."
"It is worrying that deceleration in July is somewhat broad based extending to consumer durables and capital goods," he added.