India's inflation rate surges to 11.89 percent, industry growth declines to 6-year low of 3.8 percent

The figure is higher than what analysts forecast in a poll conducted by International Business Times.

The new figure is expected to make the central bank move to tighten monetary policy further.

Last month the Reserve Bank of India (RBI) moved to hike the repo rate, or the key lending rate at which the central bank lends funds to commercial banks, from 8 percent to 8.50 percent, and the cash reserve ratio (CRR) or the proportion of reserves the commercial banks must keep with the central bank, from 8.25 percent to 8.75 percent.

Though it termed its action "somewhat painful," the central bank said it will continue its "heightened vigil" and will act again, if necessary, to keep inflationary pressures down.

The bank is scheduled to meet on July 29 for its quarterly policy review but may act sooner to tame inflation.

Further hike in key rates will make borrowing more difficult and may lead to decline in business investment, resulting in economic slowdown.

The latest industrial growth data or Index of Industrial Production (IIP) showed that India's industrial output declined to a 6-year low of 3.8 percent in May 2008, lower than 10.6 percent posted for the corresponding period last year. In April 2008, it grew by 7 percent.

Production of manufacturing goods, which has a weight of over 79 percent in IIP, showed a growth decline, posting 3.9 percent growth in May, compared to 11.3 percent a year earlier.

Capital goods output growth slowed to 2.5 percent in May, compared to 22.4 percent a year earlier.