By Milounee Purohit and Anant Chandak
BENGALURU (Reuters) - The pace of India's consumer price inflation likely eased further to a four-month low of 4.80% in October, closer to the Reserve Bank of India's 4% medium-term target, according to a Reuters poll.
Volatile food prices, which make up about half of the consumer price index (CPI) basket, have probably moderated, following a spike in July and August.
However, prices of onions, a staple in Indian cooking, are still rising sharply.
The Nov. 6-9 Reuters poll of 53 economists said CPI was at an annual rate of 4.80% in October, slower than 5.02% in September.
Forecasts for the data, to be released on Monday, were in a 4.47%-5.55% range.
Even though a strong majority expected inflation to be lower than what it was in September, in part due to the government's move to ban exports of some types of rice and raise duties for onions, about 20% of economists said the inflation rate had risen.
"I'm expecting a further slide in inflation in October, thanks primarily to a continued moderation in food inflation. Underlying our forecast is a fall in food and beverage inflation to below 6%," said Miguel Chanco, chief emerging Asia economist at Pantheon Macroeconomics.
"Beyond October, I wouldn't be surprised if there is some stickiness in the headline rate, particularly if the ongoing increase in onion prices persists. But stickiness is very different from surge and I don't expect any breach of the target range in the foreseeable future."
While the slower pace of price rises will give some comfort to the RBI, its mandate to anchor inflation to the 4% mid-point target is still some distance away.
The central bank is expected to keep its key policy rate unchanged at 6.50% at least until end-June 2024 before cutting it by 25 basis points in the following quarter, a separate Reuters survey showed.
Headline inflation was not expected to return to the RBI's mid-point target at least until the second half of 2025.
"Inflation is expected to have a choppy ride in the months ahead... Passage of base effects and a sharper rise in selected vegetable prices are likely to take the headline back above 5% this quarter and keep in that territory into 1Q24," wrote Radhika Rao, senior economist at DBS Bank.
"The central bank has opted to be cautious on the inflation outlook...(and) will be more inclined to extend its pause for the time being before venturing out to consider a change in stance as a precursor to a change in the policy direction."