NEW DELHI, Sept. 12 -- India's retail inflation picked up in August after sliding to an eight-year low in July, though it stayed well within the Reserve Bank of India's (RBI) target band, keeping the door open for interest rate cuts if economic growth falters.

Consumer prices rose 2.07% year-on-year in August, provisional data from the Ministry of Statistics and Programme Implementation showed on Friday, up from a revised 1.61% in July (earlier estimated at 1.55%). Economists polled by Mint had expected a slightly higher print of 2.2%.

Food prices continued to weigh on headline inflation, with food inflation staying in negative territory at -0.69% in August compared with -1.76% in July, underscoring the deflationary drag from cheaper fo...