RBI projects inflation to trend downwards in FY26; retains FY25 forecast at 4.8%

The Reserve Bank of India (RBI) on Friday assuming a normal monsoon next year has projected retail inflation for the new fiscal year beginning April i.e. FY25-26 at 4.2 per cent with estimates for Q1 at 4.5 per cent; Q2 at 4.0 per cent; Q3 at 3.8 per cent; and Q4 at 4.2 per cent. Nevertheless, it has retained its estimates for the ongoing financial year at 4.8 per cent, with Q4FY25 inflation projections at 4.4 per cent.

The monetary policy statement noted that headline inflation softened sequentially in November-December 2024 from its recent peak of 6.2 per cent in October. The moderation in food inflation, as vegetable price inflation came off from its October high, drove the decline in headline inflation. Core inflation remained subdued across goods and services components and the fuel group continued to be in deflation, it added.