New Delhi, Nov. 13 -- Wednesday's inflation data is likely to push the Reserve Bank of India's Monetary Policy Committee to cut the policy rate when it meets in December, with retail inflation, as measured by the Consumer Price Index coming in at 0.25%, resulting in a real policy rate of 5.25%. That's the lowest inflation ever recorded in the current series which starts from January 2012. And it is the highest real interest rate since in the period for which we have data in the current CPI series. RBI governor Sanjay Malhotra had suggested in October that the central bank could do just this. "Even though growth is strong by current reckoning, its outlook is softer and is expected to be below our aspirations. The benign outlook for headline and core inflation as a result of the downward revision of projections opens up policy space to further support growth", minutes of the MPC meeting held in October quoted Malhotra as saying. The current alignment of inflation and the policy rate means that there is a strong case for bringing down interest rates and administering a booster dose to the growth prospects of the Indian economy. Most analysts expect RBI to bring down the policy rate when it meets next in December. "November CPI is currently tracking 0.9% with available high frequency mandi data and other trackers, with downside risk owing to the remainder of GST pass through. FY26E inflation is now tracking less than 2%, implying risk of a further undershoot of ~50bps+ to RBI's FY26 inflation forecast (2.6%), which could support the case for a December rate cut (and beyond, depending on how tariff effects evolve)", Madhavi Arora, chief economist at Emkay Global said in a note. Policy implications and imperatives aside, what really happened to inflation in October? This is where a breakdown of the data can help. Unlike what the headline number suggests, the Indian economy is not caught in some sort of deflationary tail-spin. The biggest reason why inflation has turned out to be a record low is a collapse in food prices. Food part of the CPI basket-it has a share of 39% in the overall index-saw a contraction of 5%, once again a record in the current CPI series. Core inflation-the non-food non-fuel part of the CPI basket-as seen in the Centre for Monitoring Indian Economy (CMIE) database came in at 4.3% in October, the ninth consecutive month when it has remained in the ballpark of 4-4.5%. This means that a lot of the moderation in inflation could well be of a seasonal nature rather than a sudden glut of goods and services in the overall economy. Even within the food category, the record deflation was primarily a result of a sharp contraction in prices of vegetables and pulses with respective deflation of 27.5% and 16.2% in October. To be sure, food inflation was benign in most categories except edible oil and even edible oil saw a large decline in inflation between September and October. The growing gap between food and non-food inflation also entails a possible worsening of terms of trade for the rural sector in the Indian economy. "CPI inflation was expected to fall to a series low print amid favourable base and muted price momentum, but the outcome was lower than expected and the tracker for November suggests that soft CPI inflation prints are here to stay... For a forward-looking, inflation-targeting central bank, we believe the stage is set for the RBI MPC to deliver a 25 basis point repo rate cut in the upcoming December meeting," said Aastha Gudwani, chief India economist, Barclays....