Although inflation declined for the second the second month in a row in November yet the Reserve Bank of India (RBI) is widely expected to keep the policy rate on hold in its monetary policy review next week.

Fall in fuel and core inflation also dragged wholesale price based inflation down from 7.5 per cent in October to 7.2 per cent in November.

Non-food manufacturing inflation slipped from 5.2 per cent to 4.5 per cent in November. It may be noted here that core or non-food manufacturing inflation is a component of the wholesale price index.

But, the central bank is widely expected to keep the policy rate unchanged in the mid-quarter monetary policy review, which will take place on Tuesday, December 18.

Analysts at HSBC said, “Headline inflation eased unexpectedly led by fuel and core inflation, which should provide the RBI with some comfort. However, this will not be enough to trigger a rate cut next week…”

Siddhartha Sanyal, an economist at Barclays, said that the central bank seemed to prefer to lag rather than assuming any easing, in hope of easing pressures of inflation.

However, analysts continue to expect the central bank to cut the cash reserve ratio (CRR) by another 25 basis points.