INSUBCONTINENT EXCLUSIVE:
Poll also showed industrial output rose at an annual 5.7% pace in October, up from September's 4.5%.BENGALURU: Inflation is likely to have
cooled to a 16-month low in November, according to a Reuters poll, as food and fuel prices fell, supporting the Reserve Bank of India
(RBI)'s decision to keep interest rates on hold at a policy meeting last week
The poll of 40 economists predicted retail inflation sank in November to 2.80 per cent from October's 3.31 per cent
Forecasts in the poll, taken between December 4-7, ranged between 2.26 per cent and 4.00 per cent
If the consensus is realised, the November data will not only mark inflation below the RBI's medium-term target of 4 per cent for a fourth
straight month but also be the first time since July 2017 it was below 3 per cent."We expect headline CPI inflation to have slowedduring
November in a broad-based manner
Food prices are likely to have continued to remain benign
Transportation costs are also estimated to have softened due to a fall in global crude oil prices," said Shashank Mendiratta, India
economist at ANZ."Core inflation should have moderated alongside, reflecting easing demand-side pressures in the economy
The softer headline CPI print should provide comfort to the central bank."Asia's third-largest economy is slowing, dragged down by lower
consumer spending and farm growth and that should also remove any pressure for an increase in interest rates.With energy and food prices,
which account for a major chunk of the consumer price index basket, falling sharply, the trend of relatively stable inflation over the past
two years is expected to continue.While falling food costs is good news for consumers, plunging prices of some vegetables, in a country with
a chronic supply problem that is often exacerbated by unpredictable monsoons, is adding to the woes of farmers.The crash in farm prices led
to tens of thousands of farmers protesting in the national capital last month, likely worrying for a government going to the polls in six
months.Farm prices could rise if the government steps in to buy crops at higher prices, known as minimum support price (MSP), something
economists had said could be inflationary."The upside risk related to MSP has not materialized as anticipated," said Tushar Arora, economist
at HDFC Bank.Food inflation has eased recently, helped by bountiful crop supplies and sales of subsidised foodgrain to nearly two-thirds of
the 1.3 billion population."It is food prices that moves the needle on inflation," said Arjun Nagarajan, economist at SBICAP
Securities."What we don't know, is whether the demand slack is the dominant variable that is bringing food inflation down, or whether the
supply glut is the dominant variable that is bringing it down
For now, it seems that the supply glut is the more dominant variable that is bringing the prices down."Separately, the poll showed
industrial output rose at an annual 5.7 per cent pace in October, up from September's 4.5 per cent
It was boosted by infrastructure production - the output at eight core industries - which rose 4.8 per cent from a year ago.For the latest
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