Inflation pullback boosts RBI's easy money policy before Oct policy meeting

 Consumer prices rose 5.3% last month from a year earlier, the Statistics Ministry said in a statement on Monday

India’s headline rate of inflation eased in August as food prices cooled, boosting the case for the central bank to keep interest rates lower for longer to support economic growth.

Consumer prices rose 5.3% last month from a year earlier, the Statistics Ministry said in a statement on Monday. That was the slowest rate since April’s 4.2%, while the median of 40 estimates in a Bloomberg survey was for a 5.6% gain.

The pullback in the inflation print -- the last before the central bank’s October policy meeting -- will allow policymakers more room to retain their accommodative stance to support a durable economic recovery. One of the six members of the Monetary Policy Committee had disagreed with continuing the easing bias at the last meeting.

“It has come as a relief,” said Vivek Kumar, an economist at QuantEco Research. “From a policy perspective, last two months inflation print vindicates MPC’s accommodative monetary policy stance.”