MUMBAI (Reuters) - India's annual consumer price inflation eased for a third straight month in October to 5.52 percent, its lowest level since the government started releasing the data in 2012, data showed on Wednesday.
The latest number was lower than a Reuters poll forecast of 5.80 percent and September's 6.46 percent print.
COMMENTARY
SOUMYA KANTI GHOSH, CHIEF ECONOMIC ADVISER AT STATE BANK OF INDIA, MUMBAI:
"The CPI trajectory is benign and the decline is well entrenched. I expect the next number to be below 4.5 percent.
"But we do not expect an RBI rate cut before mid-2015 as inflation will remain higher than RBI's 6 percent target by January 2016. The IIP (industrial output) is better than expectation, but this could be a transient number and improve only in the last quarter of the current fiscal year."
SHIVOM CHAKRABARTI, SENIOR ECONOMIST AT HDFC BANK, MUMBAI
"We see some further downside in inflation driven by base effect. There is strong indication that food price inflation and momentum of core inflation is coming off.
"But that said, trajectory of CPI inflation will only be clear after base effect wears off post-December.
"We expect a status quo on rates in the RBI policy though the statement could be more dovish than in the September policy.
"The industrial production number is high, but the worrying aspect is consumer goods, which is fairly weak. The real improvement in industrial production will be seen next year when inflation comes down, which will spur consumer spending and exports will be higher."
RUPA REGE NITSURE, CHIEF ECONOMIST, BANK OF BARODA, MUMBAI
"It is a very sweet pair of numbers, but the point is that with IIP (industrial production) one cannot look at it with a high level of credibility because it is a very, very volatile series.
"It has to do with the lumpiness in the capital goods production series. But what really matters is that all other indicators of economic activity actually have slowed in the month of October, whether it is PMI, or credit demand or auto sales. So I don't think that today's reading of industrial production is sustainable.
"Inflation, of course, has started moderating but recent data shows that towards the end of October we have seen spikes in vegetable prices as well as in cereal prices because of delayed monsoon. So there's a big question of sustainability of these readings.
"I stick with my stance that at least in the current financial year there will not be any rate reduction.
R. SIVAKUMAR, HEAD OF FIXED INCOME, AXIS ASSET MANAGEMENT, MUMBAI
"CPI is more or less in line. Post-September we saw a cut in petrol, diesel prices. Along with the ongoing play on the base effect, both have worked on the year-on-year number.
"IIP (industrial production) is a bit above survey, but that doesn't say much.
"It's still a very weak reading at 2.5 percent. We had a series of decent reading leading up to the June quarter, but the subsequent quarters have clearly indicated a weak reading, which may point to a slightly low GDP number at the end of the month."
A PRASANNA, ECONOMIST, ICICI SECURITIES PRIMARY DEALERSHIP, MUMBAI
"The CPI data is positive.
"Next number is also expected to be benign and could be below 5 percent. But base effect will kick in after that, which will push up inflation in the January-March quarter, and average inflation could be at 7 percent by financial year-end.
"As far as RBI is concerned though, inflation is likely to undershoot RBI's 8 percent target for January 2015. There are still upside risks to the 6 percent target by January 2016 and therefore we expect rates to remain unchanged this financial year."
SOUMYAJIT NIYOGI, ANALYST, SBI DFHI LTD, MUMBAI
"The unexpected fall in October consumer inflation will mean that the inflation number for the December quarter will likely be less than 7 percent.
"This is heartening and gives RBI scope to consider rate cuts next year. On the IIP (industrial production) front, although the rebound is reassuring, we do expect some moderation in the coming days.
"The 10-year bond has already factored in this substantial fall in inflation, so the incremental gains from hereon in government bonds will be limited. Lastly we expect RBI to cut interest rates only by February next year."
(Reporting by Suvashree Dey Choudhury, Abhishek Vishnoi, Gaurava Pai, Himank Sharma, and Neha Dasgupta; Editing by Rafael Nam)
