Inflation Slows To 2.07% But Core Stays Firm

India’s retail inflation rose 2.07% year-on-year in August, coming in below a CNBC-TV18 poll forecast of 2.20%, as food prices continued to contract even though the pace of decline moderated, government data showed on Friday.

Headline inflation accelerated from 1.55% in July but stayed comfortably under the Reserve Bank of India’s 4% target. Food inflation fell 0.69% from a year earlier, versus the poll estimate of no change and a 1.76% fall in July, as vegetable prices dropped 15.9% compared with a 20.7% slide in the prior month.

Rural inflation rose to 1.69% from 1.18% in July, while urban inflation picked up to 2.47% from 2.05%.

Core inflation, excluding food and fuel, was unchanged at 4.1% month-on-month. Price pressures

eased across several categories, with pulses inflation at -14.5%, fuel and light at 2.43% versus 2.67% in July, and housing at 3.09% versus 3.17%.

The the softer-than-expected print could reinforce expectations that the RBI will hold policy rates steady in the near term.