Expert views - Consumer inflation climbs again in October

MUMBAI (Reuters) - India's annual consumer price inflation quickened to 5 percent in October, above analyst forecasts as food prices rose faster than expected, government data showed on Thursday.

Economists polled by Reuters had predicted consumer prices would rise 4.82 percent in October from a year earlier, faster than September's 4.41 percent increase, but still below the Reserve Bank of India's January 2016 target of 6 percent.

Industrial production, meanwhile, grew at a slower than expected pace of 3.6 percent in September, dampened by a slower expansion in the mining sector, data showed.

COMMENTARY:

SOUMYA KANTI GHOSH, CHIEF ECONOMIC ADVISOR, STATE BANK OF INDIA

"Inflation is well within the comfort zone, so this is largely because of the increasing pulse prices. That is, I think, adding around 60 basis points to the overall CPI numbers.

"Inflation, I'm not too much bothered. With the IIP numbers I am disappointed, because the numbers are quite weak. Whatever increase you are looking into the CPI prices as of now, that is more a reflection of not only the demand, but the supply imbalances because of the drought. In my view the growth situation remains weak and inflation under control."

A. PRASANNA, ECONOMIST, ICICI SECURITIES PRIMARY DEALERSHIP:

"CPI is in line with our expectations. Food inflation is being held up largely by pulses prices. It remains to be seen how soon the rise in pulses will unwind.

"We expect headline inflation to average around 5.8 percent in the January to March quarter, in line with the RBI's trajectory.

"We expect the RBI to stay on hold for the next two policy meetings. A residual cut of 25 bps is possible by March/April 2016, depending on the Union Budget outcome."

SUJAN HAJRA, CHIEF ECONOMIST, ANAND RATHI SECURITIES:

"We don't think there's reason to worry, but if this trend continues - (where) inflation surprises on the upside and industrial production on the downside - then obviously that's not a good situation. But we don't expect that to continue.

"We don't think in this calendar year the RBI will take any action. Any action will be in 2016 only."

SHUBHADA RAO, CHIEF ECONOMIST, YES BANK:

"We were looking at pressures on food. Some of the fuel items have also accelerated.

"Going forward we continue to believe the downside surprise will be maintained, vis-a-vis the RBI target, and the downside surprise for January inflation could be about 50-60 basis points below 6 percent in January. Subsequently we also see a downside momentum building in terms of March, somewhere close to 5 percent.

"In December's policy (meeting, we) do not anticipate a rate cut, because the last 50 bps was essentially was front loading. However, if RBI achieves 5 percent target and if the government builds the reform momentum to improve the supply side, we anticipate it opens up room for the RBI to effect another 25-50 (bp move) between January and September."

(Reporting by Karen Rebelo and Neha Dasgupta; Editing by Clara Ferreira Marques)