Headline Inflation To Average 3.5% This Fiscal: Crisil

Ratings firm Crisil said that headline inflation is expected to average 3.5% this fiscal as compared to 4.6% in the last financial year.

In its research report for August, the rating agency said that healthy agricultural production is likely to keep food inflation in check.

The kharif sowing is up a healthy 4% year-on-year as of August 8.

"We expect headline inflation to average 3.5% this fiscal from 4.6% in the last," Crisil said in its research report.

Headline inflation is defined as a rise in prices of all items in the CPI, including food and energy.

Assuming geopolitical uncertainties remain under control, Brent crude oil prices are projected to be subdued at $60 to $65 per barrel in the current financial year, which should help contain non-food inflation, the report said.

Crisil said another bout of repo cut is expected this fiscal. A cumulative cut of 100 basis points so far, along with adequate liquidity, has ensured a swift transmission down the line.

India's retail inflation rate has more than halved over the past year, slipping even below the lower end of the Reserve Bank of India's tolerance band of two per cent. It slid to 1.6% in July from 2.1% in June.

The sharp fall in retail inflation should buoy household purchasing power, particularly in the lower-income segments. This will create room for further monetary policy easing, the report added.