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Indian consumer inflation probably held below the Reserve Bank of India's 4.0% medium-term target for a second month in August thanks to a moderation in food price rises due to last year's high base, a Reuters poll of economists found.

Although food prices, which make up nearly half the inflation basket, have eased significantly in the last two months, erratic monsoon rains across India could harm crop yields and push prices higher in coming months.

The Sept. 4-9 poll of 53 economists forecast consumer price inflation at 3.50% in August from a year earlier, little changed from a five-year low of 3.54% in July. Forecasts for the data, due on Sept. 12 at 1200 GMT, ranged from 3.10% to 4.91%.

"A high base effect likely continues to play cupid... On-the-ground food prices have seen a salutary effect from a recovery in the monsoon in recent weeks... even as key agricultural states are still reeling under deficit," said Kanika Pasricha, chief economic advisor at Union Bank of India.

"We expect the base effect to erode from September onwards. Risks to food inflation from weather-related issues such as sharply higher than required rains in September need a close watch."

Vegetable price rises eased to 6.83% year-on-year in July, a significant drop from the nearly 30% y/y increases seen each month during the first half of the year, official data showed last month.

While the expected slowdown in overall price rises may provide some relief to policymakers at the RBI, economists said the recent moderation was likely temporary as a weak rupee will keep inflation elevated in the near term.

A separate Reuters poll showed inflation averaging 4.2% this quarter, with an increase to 4.5%-4.7% in coming quarters, above the central bank's 4% target.

This suggests the RBI will likely proceed cautiously with easing monetary policy. The first rate cut had been expected next quarter and most economists forecast it in December.

"It is likely CPI inflation will undershoot the RBI's 4.4% projection for Q3 2024, posing downside risks to their full-year forecast as well. The RBI will view this favourably and is likely to warm up to rate cuts by December," said Dhiraj Nim, economist at ANZ.

Core inflation, which excludes volatile items such as food and energy, was forecast to be 3.30% in August, according to the median estimate from a smaller sample of 15 economists.

The Indian statistics agency does not publish core inflation data.

Wholesale price index-based inflation likely eased to an annual 1.85% last month, from 2.04% in July, the survey showed.