The country?s annual headline inflation is expected to have touched nine-month low of 8.50% in September but is seen remaining well above the comfort zone, which may tempt the Reserve Bank of India to hike interest rates when it reviews its policy on November 2.

Analysts said successive rate hikes by RBI and good monsoon rains may moderate inflation further in coming months even though current rise in prices of manufactured products is a matter of concern. The median and average forecast of 22 economists polled was an annual rise of 8.50% in the monthly Wholesale Price Index for all commodities in September under a new expanded data series with 2004-05 as the base year.

If the actual number, which is expected to be detailed on Friday, matches the median forecast, it would be closer to 8.51% of August but lowest since December 2009 when it was 6.92%.

Policymakers admit the current level of inflation is ?unacceptable? and it has to be brought down to a ?comfortable? level of 5-6%.

Policymakers including Prime Minister Manmohan Singh and finance minister Pranab Mukherjee see inflation moderating to around 6% by the end of December.

Upside risks

Analysts are not so optimistic about a sharp decline in inflation rate in coming months as prices of food and non-food items are rising.

?Incorporating weekly trends in the primary and fuel indexes, which have averaged 17% and 11.1%, respectively, in September, we expect headline WPI to remain sticky at 8.6% year-on-year,? said Rohini Malkani, an economist at Citigroup.

RBI deputy governor Subir Gokarn has warned of price shocks from food and fuel items.

The worry is more over the rise in prices of manufactured products as they are the key ingredient of core inflation that the central bank monitors for policy review.

Rate hike fears

Policymakers have favoured more monetary action to dampen inflationary expectations as the government has almost exhausted fiscal and administrative steps to rein in price rise. RBI governor D Subbarao recently said inflation was still a ?dominant? factor in determining monetary stance.

C Rangarajan, chairman, Prime Minister?s Economic Advisory Council, said there is a need to further tighten monetary stance.

RBI has already raised repo rate by 125 bps and reverse repo rate by 175 bps in five stages between March and September this year.

In July, RBI raised its estimate for inflation to 6% by March end from 5.5% projected earlier.