In another positive development on the economic front, industrial production in September jumped 2.5 per cent compared to 0.4 per cent in August, government data showed on Wednesday. In September, consumer or retail inflation was at 6.46 per cent.
Food price inflation, under a new series published by the government, eased to 5.59 per cent in October from 7.67 per cent in September. Petrol prices have been cut six times since August while diesel prices have been lowered twice since its decontrol last month.
With consumer inflation coming below the Reserve Bank of India's target level of 6 per cent, and global oil prices hovering near 4-year lows, expectations are high that the central bank could cut rates.
But economists see little chances of a rate cut by the RBI in its next policy review due on December 2. "The RBI will keep a close watch on the global oil prices, the trend in vegetable prices and the government's fiscal situation given that the divestment programme has not yet kicked off," said Jayesh Mehta, country treasurer at Bank of America.
Sajjid Chinoy, India economist at JP Morgan, said, "I think only when the RBI is convinced that inflation will come down to 6 per cent and stay there, it would be inclined to cut rates. I think markets, on the rate cut front are getting a little ahead of themselves."
The RBI had sent a strong signal in September that it would hold off cutting interest rates until it was confident that consumer inflation could be reduced to a target of 6 per cent by January 2016.
But economists are hopeful of rate cuts later next year. Mr Mehta of Bank of America sees RBI cutting rates in the next six months. (With Agency Inputs)