Consumer inflation rose to a five-month high of 3.36 per cent in August on the back of higher food and fuel prices. Consumer inflation was 2.36 per cent in the previous month (July). Data on industrial output however showed growth recovering to 1.2 per cent in July, against a revised 0.2 per cent contraction seen in June. Economists polled by Reuters had expected August retail inflation at 3.20 per cent, with forecasts ranging from 2.50 per cent to 3.55 per cent. Monsoon rains this year have caused damages to crops of some perishable food items and hindered movement of goods.
But the August inflation figure remains below RBI's medium term target of 4 per cent.
Rising price pressures could keep RBI cautious in the near future, economists say. Anjali Verma, economist at PhillipCapital India, said that she does not expect the RBI to cut rate in near future. "We are maintaining that there is no scope for further rate reduction," she said. "The main risk points one needs to watch out for inflation projections going ahead are largely fuel and commodity prices.". The RBI's next policy meeting is on October 3-4.
Wholesale prices are expected to rise 3 per cent in August from a year ago, from 1.88 per cent in July, according to the Reuters poll. The wholesale inflation figure will be released on Wednesday.