ALSO READIndia's April retail inflation seen easing to three-month low Higher fuel prices drive up India's inflation to five-month high India's June inflation slowest in more than five years Rising food prices push up February retail inflation Cooling food prices send India's retail inflation to lowest since 2012
By Manoj Kumar
NEW DELHI (Reuters) - India's consumer price inflation rose more than expected to a five-month high in August, fuelled by strong gains in prices of food items, dampening chances of a rate cut by the Reserve Bank of India (RBI) in a policy review next month amid weak economic growth.
India's consumer price index (CPI) rose 3.36 percent in August from a year earlier, data released by the Ministry of Statistics on Tuesday showed.
Last month, the RBI cut its main policy rate by 25 basis points to 6 percent, the lowest since 2010, while keeping its policy stance at "neutral".
"We are of the opinion that RBI will not deliver any rate cut this calendar year," said Hitesh Jain, an analyst at IIFL Wealth Management.
The monetary policy committee (MPC) of the central bank had warned prices could start accelerating soon, reflecting caution, despite pressure to cut more aggressively after consumer inflation remained below its central target since October.
Separately, annual industrial output grew at 1.2 percent in July, in line with the forecast by economists in a Reuters poll, the data showed.
Industrial output contracted 0.2 percent in June.
Asia's third largest economy slowed to a three-year low in the three months to June, delivering a blow to Prime Minister Narendra Modi, who faces criticism for disrupting business activity with his shock cash squeeze last year.
LOWER FOOD OUTPUT
India's food grain production is expected to fall this year following a decline in areas under plantation, following unfavourable weather conditions in some states.
Seasonal monsoon rains have caused damage to some crops and hit movement of goods.
"Looking ahead, price pressures are set to rise further," said Shilan Shah, an economist at Capital Economics in Singapore.
Retail food inflation, which accounts for about 54 per cent of the consumer price index, rose 1.52 percent in August after prices contracted in the previous three months.
(Additional reporting by Rajesh Kumar Singh; Editing by Clarence Fernandez)
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