INSUBCONTINENT EXCLUSIVE:
The latest inflation data is due on November 12.Retail inflation likely slowed to its slowest pace in 12-months in October after food and
fuel costs fell, keeping the official consumer prices gauge below the central bank's medium-term target for a third consecutive month, a
With the battered rupee gaining slightly against the dollar, a recent cut in fuel taxes and easing global crude oil costs, consumer price
inflation likely slowed to 3.67 per cent in October from 3.77 per cent, according to the poll of 35 economists.If the data meets forecasts,
October will mark the third straight month retail inflation has been below the Reserve Bank of India's medium-term target of 4 per cent,
supporting the central bank's surprise decision to hold interest rates at its meeting last month.However, the RBI's shift in its stance to
"calibrated tightening" from "neutral" at its October 5 meeting suggests it may raise rates again, tracking other emerging market central
banks grappling with weaker currencies as the US Federal Reserve proceeds with a series of rate rises that have propped up the dollar."The
key factors driving inflation are muted fuel and food prices
Both factors should keep monetary policy on a slightly sombre note," said Shashank Mendiratta, economist at ANZ Bank, one of the most
accurate forecasters of inflation last year."But the tightening cycle has not ended yet, because there is still some upside risk to oil
prices."The latest inflation data, due on November 12, will be the first since a set of accusations have surfaced from top RBI policymakers
that the government is attempting to influence central bank policy.While the government appears to have called a truce, economists say the
administration's demands that the central bank relax lending curbs and relinquish surplus reserves pose a significant risk to the inflation
outlook."The RBI has had success in anchoring inflation expectations over the past five years
Any erosion of independence could permanently reverse this trend, affecting spending and saving decisions and wage negotiations and
ultimately push up actual inflation," noted Shilan Shah, senior Indian economist at Capital Economics.While core price pressures likely
remained elevated again in October, wholesale price inflation probably eased to 5 per cent from 5.13 per cent in September.Industrial output
likely expanded at an annual 4.3 per cent pace in September, the same pace as in August, according to the median forecast of 24 economists.
