India's headline inflation fell sharply to five-year low of 3.74% in August 2014 as compared to 5.19% in the previous month. It came below market expectations of 4.1%. June WPI inflation revised to 5.66% from 5.43% earlier.

''The WPI inflation rate is gradually softening with food and fuel prices-the two key pressure points-showing signs of easing. This is definitely a good sign,'' said Sidharth Birla, president, FICCI.

''The CPI inflation data released last week and which now is the guide post for RBI stood at 7.8% for August 2014. While there are no imminent risks towards meeting the indicative inflation target set for January 2015, the next task would be to achieve 6.0% retail inflation rate in the year after that. It is imperative to continue working on the structural bottlenecks.

Some announcements have already been made by the government on this front and we hope that the implementation part will get greater traction now. Prices of food items at the retail end continue to be a cause for concern and call for some deft supply and distribution management.''