India sees food inflation easing, low oil prices a 'bright spot'

New Delhi: India expects food inflation to ease in the absence of climatic shocks, and low oil prices will be a "bright spot for the economy", the government's monthly economic report said on Thursday.

Reserve Bank of India said this month headline inflation may average 4.5 per cent in the second half of the fiscal year, aided by weaker crude oil prices, but volatility in food prices could pose a challenge.

India's retail inflation was 3.65 per cent in August, higher than the revised 3.60 per cent in July, as vegetable prices soared.

While the report retained the nation's GDP growth projection of 6.5 per cent-7 per cent for the current fiscal year, it said urban consumption was showing some signs of weakness, evident in declining auto sales between April and August.

High transport costs are a key constraint for the businesses in increasing exports, the report said.

Indian goods exports in August fell for a second straight month, which traders blamed on rising shipping costs, an economic slowdown in China and recessionary trends in Europe and the United States.