Food, fuel prices push retail inflation to seven-month high of 3.58% in Oct

retail inflation picked up in October to a sevenmonth high, driven by faster rises in prices of food and fuel products, dampening chances of an interest rate cut by the central bank next month.

The annual consumer inflation in October increased to 3.58% from a year earlier, government data showed on Monday.

Some analysts expect the decision on Friday to slash tax rates on 178 items such as chocolates and detergent powders to 18% from 28% could marginally lower retail inflation in coming months.

“There is, however, a low likelihood of a rate cut by the RBI in the immediate term,” said Aditi Nayar, an economist at ICRA, an Indian arm of the rating agency Moody’s, adding that inflationary expectations could remain high in the second half of the fiscal year that ends in March.

RBI holds a policy review on December 6.

Retail inflation has been steadily rising since June, when it eased to 1.46% - its slowest pace since India started releasing such figures in January 2012, based on combined data for rural and urban consumers.

Separately, annual industrial output grew a lower-than-expected 3.8% in September, compared with the forecast of 4.2% by economists in a Reuters poll, data released on Friday showed.

Prices pressures are building just as the Reserve Bank of India projected last month inflation to rise in October-March to 4.2-4.6%, above its medium-target of 4%, while leaving rates unchanged.

Crude prices have rallied, sending Brent crude to its highest since June 2015, a worry given that India imports most of its energy needs.

SOME ANALYSTS EXPECT THE DECISION TO SLASH TAX RATES ON 178 ITEMS TO 18% FROM 28% COULD LOWER RETAIL INFLATION IN COMING MONTHS