Consumer prices in India eased during the month of August, remaining lower than what markets had initially anticipated, raising hopes of a rate cut by the new Reserve Bank of India Governor Urijit Patel.
India’s consumer price index (CPI) rose 5.05 percent in August from a year earlier, data released by the Ministry of Statistics showed Monday. That’s slower than the 5.2 percent median estimate in a Bloomberg survey of 35 economists and is a plunge from the previous month’s 6.07 percent rate.
Further, food inflation was 5.91 percent last month, slower than 8.35 percent recorded in July as prices of pulses, a major staple for Indias 1.3 billion population, declined in August. The easing in consumer and fuel inflation dragged the overall figure within the central bank’s comfort zone, which had targeted a 5 percent range of consumer prices.
Following higher-than-targeted rate of inflation last month, ex-Governor Raghuram Rajan left the key repo rate unchanged in the last policy meet held during his tenure in August. However, Urijit Patel, an ex-colleague of Rajan, is expected to follow his footprints and may urge for a rate cut call in his first policy meet after taking charge of the position.
Meanwhile, Prime Minister Narendra Modi faces a challenge to achieve economic growth of around 8 percent to create jobs for millions of unemployed youth, and industry has long sought lower interest rates, Reuters reported.