The consumer price index (CPI) for the month of August fell sharply to 5.05 percent year-on-year from 6.07 percent in July due to a steep fall in food prices.
As per the government data released today, about 50 percent weight in the inflation basket is enjoyed by food prices, which fell tremendously in the current fiscal.
Food inflation slowed to 5.91 percent from 8.35 percent, 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 percent, compared to 1.95 percent (revised) in June, and an expectation of 1.37 percent.
As per the CNBC-TV18 poll of economists, the forecast CPI was estimated at 5.13 percent.
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 percent by January 2017.