Inflation Cools to 3.78%, Factory Output Growth Inches Up to 3.8%

Retail inflation cooled in July, while factory output growth inched up in June, government data showed on Wednesday.

Retail inflation also known as consumer price inflation fell to 3.78 per cent compared to 5.40 per cent in June. A Reuters poll of analysts had estimated inflation to ease to 4.42 per cent in July.

Factory output growth in June rose to 3.8 per cent against 2.7 per cent in May. The analysts polled by Reuters had expected factory output measured by the index of industrial production (IIP) to rise to 3.5 per cent.

Over the last 19 months, inflation has halved from double-digit levels to below the Reserve Bank of India's 6 per cent target, giving the central bank room to shave 75 basis points or 0.75 per cent off its key repo rate this year.

Consumer price rises hit an eight-month high in June, prompting the RBI to hold rates at 7.25 per cent in August. The bank is likely to cut once more before the end of the year, a slim majority of economists in a separate Reuters poll said.

India's economy is expected to grow only 7.6 per cent in the fiscal year ending in April 2016, compared to 7.3 per cent last year, due to delays in implementing key fiscal reforms.

(With inputs from Reuters)