Expert View - Retail inflation cools further in October

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

A PRASANNA, ECONOMIST, ICICI SECURITIES PRIMARY DEALERSHIP

"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

"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)