New Delhi, July 11: Black Friday brought with it a chilling environment of gloom and doom as inflation soared to 11.89 per cent – its highest level in 13 years, industrial growth in May slumped to 3.8 per cent, stocks floundered again in a skittish market and Standard & Poor’s warned that India’s credit rating could topple back into speculative grade if its credit profile worsens.

The picture of despair was accentuated by a $5 surge in crude oil prices to a new high of $147.27, spurred by growing worries of threats to supplies from Iran and Nigeria and a strike of Brazilian oil workers next week. The surge in oil prices is bad news for India which has seen its oil imports in the two months of April and May soar 48.5 per cent year-on-year to $ 164.94 billion.

“The industrial slowdown is across the board with both consumer and capital goods much weaker than expected. Slowing growth and rising inflation add to the monetary policy dilemma,” said Sonal Varma, an economist with Lehman Brothers.

On the price front, the government put on a brave face, stating that the prices of primary articles, including food, have been tamed. However, economic advisor to the finance minister Subhasish Gangopadhyay said “double digit inflation will be there till December”. This is of concern for the government as elections will be held in six states in the winter, including Delhi, Rajasthan and Madhya Pradesh.

Gangopadhyay said the government expected investment patterns to remain strong despite the low growth figures, high interest rates and credit rating rumblings.

Manufacturing grew by a modest 3.9 per cent in May against 11.3 per cent a year ago. However, consumer durables came out from negative growth to show a 4.4 per cent rise against a fall of 0.7 per cent in May 2007. Growth in electricity generation, a key resource for the economy, plunged to 2 per cent from 9.4 per cent.

Officials said inflation rose on account of the rising prices of coconut oil which soared 11 per cent. Prices of mustard oil rose five per cent and soya oil four per cent, while those of fruits and vegetable, pulses, jowar and barley increased by one per cent each.