By Nikunj Ohri, Shivangi Acharya and Sarita Chaganti Singh
NEW DELHI (Reuters) -India's retail inflation eased in October to a four-month low, edging closer to the central bank's target of 4%, which it has said needs to be firmly in sight before it can start lowering rates.
Annual retail inflation fell to 4.87% in October, down from 5.02% the previous month. A Reuters poll of 53 economists had forecast a rate of 4.80%.
Lower core inflation, which excludes volatile food and energy prices, and a supportive base effect helped bring down the overall figure.
Core inflation was estimated to be 4.20-4.28% compared with 4.5% in September, according to three economists. The Indian government does not release core inflation figures.
Food inflation, which accounts for nearly half of the overall consumer price basket, was 6.61% in October, little changed from an upwardly revised 6.62% in September.
October's inflation rate was below the Reserve Bank of India's (RBI) upper tolerance band of 2-6% for a second consecutive month.
The central bank last month kept its key lending rate steady for a fourth consecutive policy meeting and said it remains focused on bringing inflation close to the target of 4%.
Monday's data release indicates stable inflation, but a cautious approach would be the way forward, said Madan Sabnavis, an economist at Bank of Baroda.
Last week, RBI Governor Shaktikanta Das highlighted risks from a spike in food prices saying India was vulnerable to "recurring and overlapping" food price shocks despite the recent moderation in inflation.
Vegetable, milk and cereal prices have been volatile and among the key drivers of the Asian country's inflation.
While the uptick in foodgrain prices following an uneven monsoon has manifested in prices in October, higher prices of some vegetables like onions would be partly absorbed by the typical seasonal downtrend in many other vegetables, offering some respite, said Aditi Nayar, an economist at ICRA.
"The CPI inflation would climb to 5.6% by December 2023, and remain in a wide range of 4.9-5.6% thereafter for the next two quarters," Nayar said.
India has taken a number of steps to cool price rises since July when inflation spiked over 7%. It has banned some exports of rice, wheat, sugar and tightened outbound shipments for onions.