India’s consumer price inflation likely to have slowed further in October

India’s consumer price inflation is expected to have eased further in October. According to a Societe Generale research note, India’s headline inflation is likely to have slowed further to 3.8 percent year-on-year in October from 4.3 percent seen in September.

The expected slower inflation is probably due to continued deceleration of food prices, which are driven predominantly by much lower vegetable and fruit prices as fresh arrivals have assisted in easing down prices significantly.

Food inflation in India is anticipated to have decelerated to about 2.5 percent year-on-year in October, the lowest since August 2015. But the low base effect is likely to reverse soon with inflation beginning to accelerate from January onwards and March 2017 inflation set to be above the Reserve Bank of India’s target of 5 percent year-on-year, added Societe Generale.

Moreover, with service inflation decelerating slightly, core inflation is expected to have slowed to about 4.1 percent year-on-year in October. This would be a thirteen month low.