The fall in the food prices has led to lower retail inflation which touched a record low in June. The industrial output for the month of May has reduced indicating that the manufacturing remained sluggish.
With the lowering of inflation, businesses would expect the RBI to lower interest rates when it reviews monetary policy on August 2.
The inflation, measured by the consumer price index (CPI), rose by 1.5 percent in June as compared to 2.2 percent in the previous month, according to data released by the Central Statistics Office (CSO) on Wednesday.
As compared to eight percent growth in May, 2016, the industrial output growth slowed to an annual 1.7 percent in May this year.
The manufacturing sector grew 1.2 percent against 8.6 percent in May 2016, while the mining sector contracted 0.9 percent compared to a growth of 5.7 percent in the previous year, reported TOI.
Economists and industry experts are now expecting the RBI to cut rates due to the reduced inflation.
"We now believe that the RBI will find it very difficult to provide a rationale for not cutting rates on August 2," the TOI quoted group chief economic adviser at SBI, Soumya Kanti Ghosh, as saying.