By Tushar Goenka

BENGALURU, (Reuters) – India’s retail inflation was likely to hover near a six month low in October. Higher fuel and food prices offset by a more favorable comparison with one year ago. This gave the central bank some breathing room to keep interest rates stable for now.

Following a Reuters survey of 43 economists, the median prediction for inflation (measured by the consumer price index) fell to 4.32% in November from 4.35% September.

Realized, this would make it the fourth consecutive month of inflation that has fallen within the Reserve Bank of India’s tolerance band of 2-6 percent. On Nov. 12, at 11:20 GMT, the report will be made public.

The poll had a number of estimates that were below the medium-term RBI target of 4.00%. These ranged from 3.42% to 5.00%.

Sanjay Mathur (chief economist for Southeast Asia and India, ANZ) stated that “Favourable base factors likely maintained headline CPI inflation subdued” in October in annual terms. However, this conceals a sequential increase in consumer prices.

Food prices rose, with fresh produce leading the charge. The rise in global oil prices led to a quicker transfer of domestic fuel costs and transport costs.

Unseasonal rains last month caused vegetable prices to rise sharply, particularly for key ingredients like tomatoes and onions in Indian cuisine. The global oil market experienced a rally in the last month which drove up petrol prices.

Poll respondents once again pointed out that inflation was mild compared to the stronger period one years ago. This is why it’s expected that this current moderate trend will continue for just a few additional months.

The October inflation data won’t be available until the December 6-8 meeting of the RBI rate-setting panel, which is widely anticipated to keep the repo rate at 4.00%.

According to a separate Reuters poll, the RBI will first increase its reverse repo rates by 25 basis points in January and March, then a 25-basis point hike in the repo to 4.25% for the April-June quarter.

Sakshi Gupta (senior economist, HDFC Bank) stated that India’s inflation is more favorable than those of its peer countries with rising inflationary risk.

The trend should continue in the coming months thanks to a strong base and the reduction of excise duty. There has also been some moderater in global energy crises.

According to the latest Reuters poll, India’s industrial output increased by 4.8% in September compared to 11.9% in August.