Has retail inflation cooled down in August?
A Reuters poll last month suggested another cut was likely in the final three months of this year.
Retail inflation, or consumer price index (CPI), has been inching mainly driven by food prices. However, a normal monsoon and softening of food prices in the month of August means that retail inflation might have broken its trajectory and cooled down, Reuters and Bloomberg polls show.
Official data on the consumer price index for the month of August and Index of Industrial Production (IIP) for July will be released on Monday.
As per the Reuters poll, the median forecast of 27 economists pegs CPI at 5.50% for August, down from 6.07% in July. Bloomberg said that the median estimate for its poll of 20 economists stood at 5.23%.
"(But) despite expectations of a sharp drop in CPI inflation, we maintain that there is very limited headroom for further rate cuts at the current juncture."
The RBI has cut 150 basis points off its benchmark interest rate since January 2015. A Reuters poll last month suggested another cut was likely in the final three months of this year.
In contrast to the slowdown in consumer inflation, economists in the poll predicted wholesale price inflation to have picked up to 4.01% in August from 3.55% in July.
(With Reuters and Bloomberg)
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