NEW DELHI, Sept 13 (Reuters) - India's retail inflation
eased to a four-month low in August on softer food prices as
supply side constraints eased following the lifting of
pandemic-related restrictions, which may allow the central bank
to focus further on economic recovery.
Consumer prices rose 5.30% in August from the
same month last year, lower than July's 5.59% annual inflation
rate and below a Reuters poll forecast of 5.60%, data released
by the Ministry of Statistics showed on Thursday.
In April, retail inflation stood at 4.29%.
Food prices, which account for nearly half of the inflation
basket, rose 3.11% year-on-year in August from 3.96% a month
"The headline inflation came in softer than our
expectations, largely led by downward surprise of food prices.
We expect the subsequent readings to remain fairly benign and
much lower than RBIs estimates," said Upasna Bhardwaj, economist
at Kotak Mahindra Bank.
With the latest numbers, inflation has stayed within the
Reserve Bank of India's (RBI) 2-6% comfort range for a second
month in a row. But it has been above the medium-term target of
4% for nearly two years.
Last week, RBI Governor Shaktikanta Das said the central
bank expected inflation to moderate and has focused on growth
during the pandemic, content to operate within the 2%-6% band
instead of a 4% retail inflation target.
He said the central bank would return to targeting 4%
inflation, but the timing of that was not yet decided.
In August, prices of vegetables fell 11.68% from a year ago,
while cereals fell 1.42%. However, retail fuel and electricity
prices rose 12.95% in August and transport costs rose 10.24%
from a year ago, the data showed.
Core inflation, excluding volatile food and fuel costs, was
estimated between 5.77% and 5.8%, according to two economists,
compared with 5.94% and 6.1% in July.
"Core inflation has also softened from last month. We expect
the MPC to remain focused on growth as inflationary concerns
remain under check," said Suvodeep Rakshit, economist at Kotak
Institutional Equities, referring to the RBI's Monetary Policy
(Reporting by Aftab Ahmed; Editing by Timothy Heritage and Alex