The Reserve Bank sees inflation moderating in the next fiscal and gradually aligning with the target of 4 percent on the back of substantial softening of food prices.
“CPI inflation for 2024-25 is projected at 4.8 per cent with Q4 at 4.4 per cent. Assuming a normal monsoon next year, CPI inflation for 2025-26 is projected at 4.2 per cent with 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,” RBI governor Sanjay Malhotra said in the Monetary Policy Statement.
Going ahead, food inflation pressures, absent any supply side shock, should see a significant softening due to good kharif production, winter-easing in vegetable prices and favourable rabi crop prospects, the Monetary Policy Committee statement said, adding that core inflation is expected to rise but remain moderate.
“Continued uncertainty in global financial markets coupled with volatility in energy prices and adverse weather events presents upside risks to the inflation trajectory.
Easing inflation
The Reserve Bank of India (RBI) on Friday slashed the repo rate by 25 bps, a move coming after 2020. In his first policy briefing, Malhotra said that the committee has unanimously decided to cut the rate. RBI Governor has pegged the GDP for FY26 at 6.7%. Here are the details:
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.
