Inflation Monitor (Oct.)

Consumer price inflation is likely to have eased in October following a renewed drop in food inflation. This may prove enough to keep the RBI on the side-lines in its meeting next month. But with core inflation likely to remain elevated for a while yet, we think the tightening cycle still has a little bit further to run. Meanwhile a new risk to the outlook has appeared in the form of government attempts to exert influence over the central bank.