Expert views: August retail inflation eases; raises rate cut hopes

MUMBAI (Reuters) - India's annual consumer price inflation eased to 5.05 percent in August, helped by smaller rises in food prices, government data showed on Monday.

Economists surveyed by Reuters had expected annual retail inflation to come in at 5.5 percent last month, compared with 6.07 percent in July.

COMMENTARY

INDRANIL PAN, GROUP ECONOMIST, IDFC BANK LTD, MUMBAI:

"The CPI number is lower than overall estimates driven mostly by food prices. But given the way this number has been jumpy over the last few months and now that the monsoons are not looking as good as it was expected earlier, the RBI may want to wait to till December to get greater evidence on the trajectory of food prices."

"I don't think this number will give thumping confidence to the RBI to cut rates in October. It may rather continue to focus on improving liquidity and transmission of its previous rate cuts in the economy. On the other hand, the fall in the non-durables to the negative territory is a worry especially for revival of growth."

SHAKTI SATAPATHY, FIXED INCOME STRATEGIST, AK CAPITAL, MUMBAI:

"A good CPI show with more than anticipated seasonal fall in vegetable prices followed by pulses prices. Further the fall in core CPI and fuel index have dragged down the overall numbers almost akin to the RBI comfort zone."

"On the contrary the production index went below negative territory as against the expected reading largely resulting from a considerable fall in basic goods followed by volatile capital goods. With not so noticeable recovery in consumer demands and a well accommodated inflation figure from food & fuel, the scope of 25 basis point cut in the October 2016 policy meet seems to be on the cards."

(Reporting by Suvashree Dey Choudhury, Abhirup Roy and Devidutta Tripathy; Editing by Euan Rocha)