NEW DELHI: Lower food prices likely cooled India’s inflation rate in August, a Reuters poll showed, but probably not by enough to give the central bank scope to ease monetary policy again anytime soon. Official data on the consumer price index is due to be released at on Monday.
The median forecast from the Reuters poll of 27 economists pegs it at 5.50 percent for August, down from 6.07 percent in July. The lower number is still above the Reserve Bank of India’s March 2017 inflation target of 5 percent and, if realised, would be the fifth straight month that annual price rises stayed above that mark.
“Owing to the unseasonal decline in prices of vegetables and pulses, the month-on-month momentum in food inflation is likely to have cooled off,” said Jay Shankar, chief India economist at Religare Capital Markets in Mumbai, who had the same call as the wider poll median on inflation. “(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 Reserve Bank of India has chopped 150 basis points off its benchmark interest rate since January 2015.
