Experts said, although the RBI takes into account the Consumer Price Index-based inflation while deciding its monetary policy stance, the decline in core inflation has strengthened the case for a rate cut.
According to the data released yesterday by the Ministry of Commerce & Industry, the increase in prices of certain food items was partially neutralized by static prices of manufactured goods during August 2019. The Wholesale Price Index based inflation was 1.08 per cent in July and 4.62 per cent in August last year.
Inflation in food articles rose to 7.67 per cent during the month as against 6.15 per cent in July mainly on account of rise in prices of vegetables and protein-rich items. Vegetable inflation went up at 13.07 per cent from 10.67 per cent in the previous month. However, fuel and power basket continued to witness deflation at 4 per cent in August as against 3.64 per cent in July.
The retail (CPI) inflation in August rose marginally to 3.21 per cent as against 3.15 per cent in the previous month mainly due to costlier food items, government data showed last week.
The Reserve Bank has cut key repo rate by 110 basis points during this year by effecting a total of four cuts so far.