Annual retail inflation in June was 3.18 per cent, up from 3.05 per cent the previous month, but below analyst forecasts, government data showed on Friday. A Reuters poll had predicted retail inflation at 3.20 per cent for June. Core consumer inflation, which strips out food and fuel prices, was estimated at an annual 4.09-4.11 per cent in June, marginally lower than May's 4.1-4.2 per cent.
"Food inflation trend is upwards while core is downwards, so the overall outlook on inflation is benign. The RBI will continue to maintain its accommodation stance and could do another 25-50 basis points rate cuts in this financial year," said Sujan Hajra, chief economist at Anand rathi Securities.
Inflation has come down sharply from a peak of more than 12 per cent in 2013, and was below the Reserve Bank of india's (RBI) 4 per cent target for the eleventh consecutive month. Comforted by subdued price pressures but concerned about faltering growth, the RBI has cut its policy rate three times since February.