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India's headline inflation breaches central bank's threshold

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Food and beverage inflation rate accelerated to 6.93 per cent, fueled by a more than 26 per cent surge in prices of vegetables, including onion that forms the base of the Indian gravy.

[NEW DELIHI] India's retail inflation quickened for the third straight month in October, breaching the central bank's 4 per cent medium-term target and possibly slowing the pace of monetary policy easing.

Consumer prices rose 4.62 per cent last month from a year earlier, the Statistics Ministry said in a statement on Wednesday. That is higher than the 4.35 per cent median estimate in a Bloomberg survey of 34 economists.

Food and beverage inflation rate accelerated to 6.93 per cent, fueled by a more than 26 per cent surge in prices of vegetables, including onion that forms the base of the Indian gravy. Pulses and products gained 11.7 per cent, while fuel and light prices fell 2.02 per cent.

While the Reserve Bank of India has cut interest rates five times this year, including an unconventional 35 basis point reduction in August, the above 4 per cent inflation print may limit its room for making another deep cut

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For now, RBI Governor Shaktikanta Das has said policy makers will "continue with the accommodative stance as long as it is necessary to revive growth" in an economy expanding at the weakest pace in six years

Gross domestic product data for the three months to September is due Nov 29

The law mandates RBI to maintain inflation in a range of 2 per cent to 6 per cent, but monetary authorities have eased policy to revive demand in the economy after waning consumption hit growth in Asia's third-largest economy

Factory output posted the steepest decline in eight years in September, and latest high-frequency data show there was no respite from the slowdown in the fiscal third quarter started October. Purchasing managers surveys signaled weak manufacturing and services activity last month

Data on Friday will probably show India's trade deficit widened in October.

BLOOMBERG