Inflation rate had gone up to a 10-month high in August but has stayed below the central bank’s 4% medium-term target by strengthening expectations that there will be another interest rate cut next month.
The annual retail inflation was at 3.21% as shown by the data from the Ministry of Statistics. A Reuters poll has forecasted an annual retail inflation rate for August of 3.3%.
Last month’s rate was below the central bank’s target for a 13th straight month. The Reserve Bank of India (RBI) last month had lowered its benchmark repo rate for a fourth meeting in a row. It dropped 110 basis points so far this year to 5.40%.
Economists have explained that RBI could cut rates to support consumer demand and private investment as economic growth has slowed to a more than six-year low of 5%.
Aditi Nayar, principal economist at ICRA, the Indian arm of Moody’s has said that the high frequency data for August 2019 has revealed a recovery was not under way despite a pick-up in industrial growth in July 2019.
New Delhi has largely been relied on the central bank to support the economy by resisting pressure to provide a stimulus to boost consumer demand and private investments.
India’s monthly passenger vehicle and car sales have recorded their steepest fall ever in August prompting many companies to cut jobs.
India’s unemployment rate has risen to 8.2% in August compared with 6.3% a year ago and 7.3% in the previous month.