August CPI falls to 5.05 per cent; July IIP shrinks by 2.4 per cent

The consumer price index (CPI) for the month of August fell sharply to 5.05 per cent year-on-year from 6.07 per cent in July due to a steep fall in food prices.

According to the government data released on Tuesday, about 50 per cent weight in the inflation basket is enjoyed by food prices, which fell tremendously in the current fiscal.

Food inflation slowed to 5.91 per cent from 8.35 per cent, with high pulses prices being offset by weak vegetable prices. Separately the data showed that July index of industrial production (IIP) came in at 2.4 per cent, compared to 1.95 per cent (revised) in June, and an expectation of 1.37 per cent.

According to the CNBC-TV18 poll of economists, the forecast CPI was estimated at 5.13 per cent.

The fall in inflation and industrial output may bolster hopes for an interest rate cut by the Reserve Bank of India, which is targeting to bring CPI down to five per cent by January 2017.