India’s retail inflation slowed to a record low of 3.78% in July, while factory output expanded at a four-month high of 3.8% in June, raising hopes that the Reserve Bank of India (RBI) will cut interest rates to aid investment and spending.
“The growth in manufacturing lead by consumer durables and basic goods is a positive development for the economy,” finance minister Arun Jaitley said in a statement. “It shows that the economy is firmly on the growth path”.
He said that these figures are consistent, and need to be read with the growth in indirect tax receipts.
Factory output, as measured by the Index of Industrial Production (IIP), had grown 2.5% in the previous month and 4.3% in the same month of the previous year.
Consumer price index (CPI)-based retail inflation, which measures changes in shop-end prices, grew at a slower 3.78% in July, compared to the previous month’s 5.40% pulled down by lower food prices.
Consumer food price inflation, a measure of how costly the platter has become over a 12-month period, grew at 2.15% in July against 5.48% in
the previous month.
A lower inflation rate could give the RBI more elbow room to announce further cuts in interest rates in the coming months. The RBI kept rates unchanged this month to contain inflation.