The annual consumer price inflation eased to 3.66 percent in August, government data showed on Monday. Retail food inflation for last month came in at 2.20 percent, higher than 2.15 percent in July. "Inflation has come higher than street expetctation and this is the last month of favourable base effect on inflation. Inflation is expected to inch up from next month and there is no comfort from vegetable prices. Also, we expect the Fed to not hike rates in September, which means if RBI cuts rates this month then it may aggravate the capital outflow situation," said Indranil Pan, Group Chief Economist, IDFC Ltd. "The bigger thing is that soft inflation, and to some extent a deflationary trend, is continuing. We expect this to continue. We expect a rate cut, if not immediately, by the month-end policy meet," said Sujan Hajra, economist.
