Low inflation not enough: Barclays
Inflation today declined marginally to 7.45 per cent in October, from 7.81 per cent in September, despite the fuel price increases in mid-September, which were not fully reflected in the previous month's inflation number.
"While a positive surprise, we think today's print should not be seen as a resounding signal that inflationary pressures are dissipating in India," Barclays said in a research note, adding that "it may not be a game-changer for the RBI's policy guidance".
The Reserve Bank is likely to "stay put" in its next policy meeting in December and may go for a cut in key policy rates in the first quarter of next calender year, Barclays said.
"At the moment, we maintain our baseline scenario of rate cuts in first quarter of 2013 and continue to forecast a 100 basis points reduction in the repo rate during first half of 2013," the report said.
The moderation in the price rise comes amids a string of bad data released on Monday. These included contraction in industrial output, and decline in exports along with rise in retail inflation, dampening the hopes of economic revival.
The main reason behind today's decline in inflation was because of lower food prices, as food inflation softened to 6.6 per cent year-on-year basis in October from 7.9 per cent in September, but this should not
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