(MENAFN- AFP) India's consumer price inflation slid unexpectedly in September to its lowest in nearly three years, data showed Monday, giving more scope for an interest rate cut that could spur a stuttering economy.
Consumer inflation tumbled to 6.46 percent in September, down from August's revised 7.73 percent and far better then a consensus market forecast of 7.1 percent.
Consumer inflation was over 10 percent last year but Reserve Bank of India governor Raghuram Rajan's aggressive policies to curb price rises appeared to be paying dividends, economists said.
"One shouldn't read too much into one set (of numbers) but it's looking increasingly likely the bank will meet its inflation targets," Capital Markets chief Asia economist Mark Williams told AFP.
"As a result, the RBI could start loosening monetary policy earlier than expected, especially with industry essentially still on its back," Williams said.
Rajan, who has declared he wants to "break the back of inflation", a persistent problem in India, has set a goal of wrestling down consumer inflation to six percent by January 2016.
The inflation fall was helped by bountiful rains in the final stages of a patchy monsoon that lowered food prices.
The inflation reading was the lowest figure since the government introduced the current consumer price index in January 2012.
But economists also cautioned the September figure was flattered by last year's high inflation and that statistical effect could wear off toward year-end, pushing inflation higher again.
Last week, the central bank left interest rates on hold at a steep eight percent where they have stood for over a year, dampening business investment and consumer spending.
Global crude oil prices, which have fallen nearly 20 percent this year, have also helped reduce inflation in the fuel-import dependent nation.
The price data figures came late last week showed industrial production grew by an unexpectedly weak 0.4 percent year-on-year in August, fuelling business calls for rate cuts.
India's economy has posted two years of sub-five-percent growth, the longest slowdown in a quarter century.
But foreign investors have poured money into Indian stocks in hopes the new right-wing government's moves to clear infrastructure projects and create a more favourable business climate will lift growth and help India emulate China's economic ascent.
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