India’s CPI inflation Inches up to 3.21 percent in August 2019

India’s retail inflation ticked up to 3.21 percent in August compared to 3.15 percent in July, highest in last ten months. The acceleration in the inflation was largely due to rise in food items like meat and fish, vegetables and pulses.

Core inflation, which excludes volatile items price such as food and energy, contracted marginally to 4.20 percent in August from 4.25 percent in July. The contraction in the core inflation has been indicating weak demand in the economy.

Despite a small tick up in headline inflation, it stayed below RBI’s medium-term target of 4 percent. Given the subdued inflationary pressure, falling manufacturing PMI , industrial production index  and slowing economic growth, RBI has lowered its repo rate by 110bps over last four MPC meetings.  Given the subdued inflationary pressure and slowing economy, RBI could cut rates further in the next MPC meets on 4^th Oct 2019.