September inflation drops to almost three year low

India's consumer price inflation slid unexpectedly in September to its lowest in nearly three years, data showed Monday, giving more scope for an interest rate cut that could spur a stuttering economy.

Consumer inflation tumbled to 6.46% in September, down from August's revised 7.73% and far better then a consensus market forecast of 7.1%.

Consumer inflation was over 10% last year but Reserve Bank of India (RBI) governor Raghuram Rajan's aggressive policies to curb price rises appeared to be paying dividends, economists said.

"One shouldn't read too much into one set (of numbers) but it's looking increasingly likely the bank will meet its inflation targets," Capital Markets chief Asia economist Mark Williams told AFP.

"As a result, the RBI could start loosening monetary policy earlier than expected, especially with industry essentially still on its back," Williams said.

Rajan, who has declared he wants to "break the back of inflation", a persistent problem in India, has set a goal of wrestling down consumer inflation to six percent by January 2016.

The inflation fall was helped by good rains in the final stages of a monsoon that lowered food prices.

The inflation reading was the lowest figure since the government introduced the current consumer price index in January 2012.