Inflation hits 8-month low, revives rate debate

Analysts feel the central bank will wait till January to gauge if the drop is just a one-off case or trend before it trims the lending rate to spur economic growth.

The reading of inflation is further blurred by a sharp upward revision of the number for August to 8.01% from 7.55% reported earlier, causing analysts to wonder a similar review was in the offing for October too.

The government had earlier revised up the figure for March to 7.69% from 6.89%. Inflation hit 7.47% in December last year after tripping 9% in each of the first 11 months of 2011, which means the base for December 2012 inflation would be relatively unfavourable.

Importantly, core inflation (price rise in non-food manufactured items) — a key input for monetary policy-making—hit a four-month low of 5.2% in October, marking its third straight monthly decline. Core inflation had crept up to 5.4% in July after staying close to 5% in the four months through June and hit 5.8% in August before easing to 5.6% in September.

The RBI will hold its next monetary policy review meeting on December 18.

Economists in a Reuters poll predicted inflation to hit a 11-month high of 7.96% in October after it scaled a ten-month peak of 7.81% in September as some were expecting a full cascading effect of

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