(Repeats story issued late on Monday, with no change to text)
* CPI eases to 3.66 pct in Aug from 3.69 pct in July
* Wholesale prices fall for 10th straight month in Aug
* Analysts expect RBI to cut interest rates on Sep. 29
* US Fed rate decision seen weighing on RBI's action
By Rajesh Kumar Singh
NEW DELHI, Sept 14 (Reuters) - India's inflation dived to a new low in August, helped by falling global commodity prices, bolstering prospects of an interest rate cut by the central bank later this month.
Retail inflation, which the central bank tracks to set rates, eased to 3.66 percent in August from a revised 3.69 percent a month ago. The reading was almost in line with 3.6 percent forecast by analysts in a Reuters poll and way below the Reserve Bank of India's 6 percent target for January 2016.
It came hours after other government data on Monday showed wholesale prices tumbled for a tenth straight month last month, falling an annual 4.95 percent compared with a provisional 4.05 percent slide in July.
With price pressures at record lows, expectations are building that the Reserve Bank of India will lower borrowing costs by at least 25 basis points (bps) at its next policy review on Sept. 29, after three cuts earlier this year, to spur economic growth.
"The inflation trajectory will be lower than RBI's estimate," said A. Prasanna, an economist with ICICI Securities Primary Dealership Ltd, who expects the central bank to deliver a 25 basis points of rate cut a fourth time this year.
Calls for a rate cut have grown louder after annual economic growth slowed to 7 percent in the April-June quarter from 7.5 percent in the previous quarter. And some economists fear real growth is more sluggish than official figures suggest.
Arvind Panagariya, a top policy adviser to the government, last week said the economy needed 50-100 bps of rate cuts.
Being a net importer and consumer of commodities, India is reaping the dividends of a slump in global prices of coal, oil, iron ore and other basic materials.
DEFLATIONARY PRESSURES?
The rapid deceleration in prices has ignited a debate in New Delhi whether Asia's third-largest economy is heading towards deflation.
Arvind Subramanian, Modi's chief economic adviser, early this month warned of looming deflation and called for measures to boost consumer demand and step up investment.
RBI Governor Raghuram Rajan, however, is worried about a resurgence in price pressures in a country where inflation has been notoriously volatile.
While food inflation has broadly remained in check despite below average summer monsoon rains, prices of some staples such as onions are racing up. Retail vegetable prices, for instance, gained nearly 8.5 percent from July.