India CPI Inflation Slows For Second Month Boosting Rate Cut Hopes

(RTTNews) - India's consumer price inflation eased for a second straight month in August and the further slowing coupled with the record low wholesale price growth reported earlier on Monday, have strengthened the case for an interest rate cut from the central bank later this month.

The consumer price index rose 3.66 percent year-on-year after 3.69 percent in July, the Central Statistics Office said Monday. Economists were looking for a slightly lower figure of 3.57 percent.

Food price inflation eased to 2.20 percent from 2.15 percent.

Data released earlier in the day showed that the wholesale price index decreased a record 4.95 percent year-over-year in August. The fall was more severe than the 4.36 percent slump economists had forecast. In July, wholesale prices dropped 4.05 percent.

The Reserve Bank of India targets to keep inflation around 6 percent by January 2016. The central bank has lowered the key interest rate by 75 basis points this year. Economists are looking for another quarter-point reduction in the next review, due September 29.

Early August, the central bank left the repo rate unchanged at 7.25 percent as it awaited greater transmission of the effects of the previous three rate reductions into the economy. The bank retained its economic growth forecast for 2015-16 at 7.6 percent.