Inflation @ 7.45%

Inflation eased to an eight month low in October but was still above the Reserve Bank of India’s (RBI) comfort level which could complicate the policy choice for the central bank.
Data released by the government showed the the annual rate of inflation, based on monthly wholesale price index, stood at 7.45% in October as compared to 7.81% for the previous month and 9.87% during the corresponding month of the previous year. However, the worrying sign was the upward revision of the August figure to 8.01% from the previous estimate of 7.55%.
Inflation in India is among the highest in the Asian region and is one of the key factors which has prompted the RBI from easing interest rates.
In the latest policy review the RBI reduced the cash reserve ratio — the amount of funds that the banks must keep with the central bank — by 25 basis points and said there was a “reasonable likelihood of further policy easing in the fourth quarter of this fiscal year”.
But it cautioned that the guidance will, “however, be conditioned by the evolving growth-inflation dynamic.” Inflationary pressures have remained stubborn with food inflation emerging as a major challenge for policy makers. Latest data shows that consumer price inflation has also inched up and is hovering near double-digits. Current data showed some easing in pressure on vegetables, fruit and milk prices but it held up for cereals, pulses, eggs, meat and fish. Cereal prices rose an annual 14.35% in October while pulses prices shot up 20%. Eggs, meat and fish rose 13.82% year-on-year.