Inflation cools to 10-month low; industrial output expands by 6.6 pc

Retail inflation cooled to a 10-month low in August on cheaper food items while industrial output expanded by 6.6 per cent in July, official data showed Wednesday.

The good news on the inflation and factory output front comes amid falling rupee and rising petrol and diesel prices.

The RBI, which is struggling to stem rupee depreciation, will be factoring in the data while deciding the interest rate at its next bi-monthly monetary policy meeting on October 5.

Consumer Price Index (CPI) based inflation fell to 3.69 per cent in August on the back of easing prices of fruits, vegetables and other food items, as per data released by the Central Statistics Office (CSO).

Retail inflation was at 4.17 per cent in July and 3.28 per cent in August 2017.

The previous low for CPI inflation was in October 2017, when it stood at 3.58 per cent. Inflation remained above RBI's targeted rate of 4 per cent since then.

As per the CSO, rate of price rise in the food basket fell significantly to 0.29 per cent in August 2018 as against 1.37 per cent in the previous month.

Vegetable prices declined by 7 per cent in the month under review. The rate of price rise in fruits stood at 3.57 per cent, compared to around 7 per cent in July.

However, there was a moderate increase in inflation in the fuel and light segment. It rose to 8.47 per cent in August compared to about 8 per cent in July.

Commenting on the inflation numbers, Economic Affairs Secretary Subhash Chandra Garg tweeted: "August consumer price index at 3.69% (down from 4.17% in July) indicates further moderation in retail inflation. Food inflation in August at .29% only guards majority of poor people from any rise in prices. Sound Indian macroeconomic story continues."