Retail Inflation preview: India's CPI expected to be around 4.6-4.9% in October

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Bank of India (RBI) with a sense of assurance, enabling them to maintain interest rates at a stable level over the coming months, as suggested by experts. According to a Mint poll of 17 economists, India’s retail inflation likely cooled to 4.8 per cent in October from 5 per cent in September. However, economists warned that vegetable prices still pose an upside risk to their forecasts.

According to a Reuters poll, India's consumer price inflation may have eased further to a four-month low of 4.80 per cent in October, slower than 5.02 per cent in September, as per the November 6-9 Reuters poll of 53 economists. While inflation is showing signs of further easing experts, economists point out that vegetable prices remain a risk and can cause a spike in inflation in coming months. Besides, fluctuations in crude oil prices are also major concerns amid geopolitical tensions.

Rahul Bajoria, MD & Head of EM Asia (ex-China) Economics, Barclays, underscored that CPI inflation slowed further to 4.6 per cent year-on-year (YoY) in October as food inflation continued to ease, but this reprieve is likely to be fleeting, as onion prices are climbing. "Pressures from non-perishable food prices also persist. Core inflation was broadly stable, supported by easing momentum and base effects.

The first advance estimates of kharif production showed lower production of pulses, cereals and sugar (down 3-10 per cent YoY), which could signal that upward pressure on food prices may remain in the near term," said Bajoria. "We expect food inflation to print 5.3 per cent for October (September: 6.3 per cent). Based on our estimates, food prices rose by 0.1 per cent month-on-month, with deflation in vegetable and oilseed prices, but increases in prices