New Delhi, Jul 13 (DHNS): Backed by higher food prices, retail inflation was high at 5.77% in June, but industrial production looked up again in May, rising at the fastest pace in the past three months.

Food inflation increased 7.79% in June from 7.47% in May. Prices of sugar, vegetable and pulses recorded a double-digit increase in their rates on a year-on-year basis.

Retail inflation in rural areas was at 6.2%, and in urban areas, it was 5.26% in June, the data released by the government showed calling for an urgent need to enhance distribution network in rural areas.

High inflation has dashed hopes of the RBI cutting interest rates in its August 9 policy.

The May IIP (Index of Industrial Production) data meanwhile posted a bold headline number, but sectorwise, the capital goods output fell 12.4%, while consumer goods was up just 1.1%. The manufacturing sector that constitutes 75% of the index grew only 0.7% in May, compared with 2.1%, a year ago. Power generation grew 4.7%, mining sector recorded a growth of 1.3% in June. Expressing concern, industry body FICCI said the growth in manufacturing remained a cause for concern. The weak consumer and investment demand pointed to the fact that recovery was going to be slow in manufacturing.

“The government has implemented many measures in terms of ease of doing business and to improve business environment in the country, which we are convinced will help in lifting the growth of manufacturing in the country,” it said.