A vendor hands a currency note to a customer at a wholesale market in New Delhi, India, May 2, 2025. REUTERS/Priyanshu Singh
A vendor selling vegetables smokes a hookah as he waits for customers alongside a road in Srinagar July 9, 2023. REUTERS/Altaf Hussain

By Pranoy Krishna

BENGALURU, Dec 8 (Reuters) - India's inflation rate likely rose modestly in November, while remaining near multi-year lows, as fading base effects and a pickup in food prices pushed up overall price growth, according to a Reuters poll of economists.

Inflation in Asia's third-largest economy has eased markedly this year and touched a series low in October due to a high base from last year. Food prices, which make up nearly half of the consumer price index (CPI), have fallen sharply in recent months, driven by vegetable costs' double-digit decline since April.

The December 4-8 Reuters poll of 41 economists forecast that inflation as measured by the annual change in the consumer price index rose to 0.70% in November from 0.25% in October.

Forecasts for the data, due for release on December 12, ranged between -0.10% and 1.30%

That would mark the 10th straight month inflation has remained under the Reserve Bank of India's medium-term target of 4%.

"The CPI likely stayed underrated in November but recorded a rise from last month due to a broad-based increase in food prices coupled with a diluting base effect," said Kanika Pasricha, chief economic adviser at Union Bank of India.

"Barring a few segments like cereals and sugar, food prices across the board witnessed a seasonal pickup...with tomato prices clocking a double-digit month-on-month spike."

Following the widely expected 25 basis-point interest rate cut on December 5, RBI governor Sanjay Malhotra said there was still policy space to support growth.

Although the base effects driving inflation lower this year were largely expected by economists, the pace of fall in food prices has surprised many - partly due to ample supply in the market and the absence of any major weather-related disruptions.

"We are moving away from a time period where you saw multiple weather-related shocks disrupting food supply, and now we are seeing the other end of the spectrum, where consecutive good cropping cycles are helping to moderate food inflation," said Sakshi Gupta, principal economist at HDFC Bank.

"Till Q2 next year we expect that broadly inflation will remain below 4%."

The RBI expects inflation in the current financial year to average 2.0%, lower than its previous estimate of 2.6%. That was also lower than the 2.2% predicted in a Reuters poll conducted last month.

Core inflation, which excludes volatile food and fuel components and better reflects underlying demand, is expected to have been at 4.39% in November, roughly unchanged from the pace observed in October.

The Indian statistics office does not publish official core inflation data.

The wholesale price index likely fell 0.60% year-on-year in November after a 1.21% decline in October, the poll also showed.

(Reporting by Pranoy Krishna; Polling by Devayani Sathyan and Susobhan Sarkar; Editing by Hari Kishan and Hugh Lawson)