India’s headline inflation likely to have eased slightly in June, RBI likely to cut rate by 25 bps in August

India’s inflation data for June and industrial production data for May are set to release tomorrow. According to a DBS Bank research report, the inflation is likely to have come in at 3 percent year-on-year. Consensus expectations are for 3.05 percent.

High-frequency food price pressures hint at stabilization after having risen for six months. Domestic fuel prices were also a bit lower in the month, which along with a seasonal pullback in the housing segment is expected to keep the headline in check, whilst the core rate coms to 4 percent, said DBS Bank.

Meanwhile, looking at the PMI trends and core industries output, the industrial production growth is likely to have slowed down to 2 percent year-on-year in May from April’s 3.4 percent. Weak production and manufacturing figures are greatly in sync with regional trends as protectionist trade policies linger.

“On policy, a mix of sub-target inflation and weak IIP numbers is likely to keep the RBI policy committee on the easing path, with a 25bp cut expected in August”, added DBS Bank.