Retail inflation fell to 7.01% in June; May IIP growth at 19.6%

New Delhi: Retail inflation in India fell somewhat to 7.01 percent in June, but remained significantly above the Reserve Bank of India's tolerance limit for the sixth straight month as reduced gasoline and cooking oil prices offset increased services and food expenses, according to government statistics.

Despite a significant recent spike in food costs, which rose at the quickest rate in nearly two years, overall inflation was held in check when the government reduced taxes on gasoline and diesel and set limitations on food exports. Read More: 

In contrast, government records show that industrial production increased by 19.6 percent in May. Read More: 

The Index of Industrial Production (IIP) increased by 7.1 percent in April of this year after holding flat for the previous seven months.

Though growth in the index of industrial production (IIP) appears to be extremely remarkable, it is simply a carryover from the previous two years. IIP growth was 27.6 percent in May of previous year, owing primarily to the low-base effect.

In August of the previous year, industrial production increased by 13%. Following that, IIP growth remained below 4.4 percent (in September) and fell below 1 percent in November and December of last year.

The RBI has hiked interest rates by 90 basis points this year to 4.9 percent and plans to boost them further in the coming months. RBI Governor Shaktikanta Das has stated that inflation is unlikely to fall below its stipulated target band until December.