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 India's annual retail inflation eased to 5.88% in November from 6.77% in the previous month, helped by a slower rise in food prices, government data showed on Monday.

The Dec. 5-8 Reuters poll of 45 economists had predicted the second consecutive decline in inflation to an annual 6.40% from 6.77% in October.

COMMENTARY

SUJAN HAJRA, CHIEF ECONOMIST, ANAND RATHI, MUMBAI

"Retail inflation and industrial production data released today came substantially below our and consensus expectations. In line with usual seasonality, food prices declined in November 2022 versus the previous month.

"The decline, however, was significantly more than expected. Non-food inflation also came down on month-over-month basis. The fall, however, was marginal and core inflation continues to remain elevated at about 6%. With the retail inflation falling below 6%, it is now within the comfort zone of the Reserve Bank of India.

"This, coupled with sharp contraction in industrial production, particularly manufacturing activities, macroeconomic concerns are now likely to shift from high inflation to decelerating growth.

"Sticky core inflation would also be a reason for worry. While monthly data can be considerably volatile, the current trend suggests that the RBI would be in the pause mode during the next monetary policy decision and may subsequently change the policy stance to neutral."

SUVODEEP RAKSHIT, SENIOR ECONOMIST, KOTAK INSTITUTIONAL EQUITIES, MUMBAI

"We continue to see CPI inflation around 6% till February 2023 before dipping sharply to 5% in March and to around 4.5% in 1QFY24. The inflation trajectory is likely to be slightly below the RBI's latest estimate.

"The case for a pause in the February policy itself will get stronger, especially as the next few CPI inflation prints possibly remain below 6%.

"However, with the focus increasing on sticky core inflation, the February policy will be a tough choice between further tightening and a prolonged pause, especially if global and domestic growth impulses start softening.

"The skew, for now, remains towards a last 25 bps hike, followed by a prolonged pause."

GARIMA KAPOOR, ECONOMIST, INSTITUTIONAL EQUITIES, ELARA CAPITAL, MUMBAI

"Favorable base effect and seasonal correction in food prices drove the Nov CPI inflation to a 10-month low of 5.88%.

Going ahead, easing supply side impulses, commodity price correction, especially Brent crude, and seasonal softening in food prices led by vegetables are likely to be key tailwind for inflation trajectory.

We see CPI below 6% by Feb 2023 and anticipate the MPC to hike rate by another 25-35 bps in Feb 2023, given its focus on core inflation. We expect a pause thereafter."