Will Inflation Hover Around 0.45% Next Month? SBI's Insight
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Synopsis
SBI projects India's inflation could hit 0.45% next month, indicating a need for decisive RBI measures. With CPI inflation at a 99-month low, the report emphasizes the importance of adapting to changing economic conditions. Explore the implications of these developments on the Indian economy.
Key Takeaways
- India's inflation could reach 0.45% next month.
- Current CPI inflation is at a 99-month low of 1.54%.
- Food prices have significantly contributed to the decline in inflation.
- SBI expects average CPI inflation for FY26 to be 2.2%.
- Kharif sowing may help keep food prices low.
New Delhi, Oct 14 (NationPress) India's inflation rate is expected to stabilize at around 0.45% next month, prompting the need for decisive measures, as highlighted in a recent report by the State Bank of India (SBI). The report emphasizes that, representing a diverse array of market voices and public opinion, 'we anticipate that the RBI MPC will be attuned to the evolving dynamics in these intriguing times.'
Notably, the inflation projection for FY27 stands significantly lower at 3.7%, according to Dr. Soumya Kanti Ghosh, Group Chief Economic Advisor at SBI.
Dr. Ghosh cautioned that the RBI, tasked with inflation targeting, risks missing its mark if it remains overly influenced by market noise, especially when the evident decline in inflation contrasts sharply with the Central Bank's predictions.
'It is more prudent to consider rate cuts (Type I error) rather than remain overly cautious, which could lead to being outpaced as market perceptions fluctuate regarding Mint Street's intentions,' Dr. Ghosh added.
India's CPI inflation reached a 99-month low of 1.54% in September, driven by a drop in food and beverage prices.
Significantly, the decrease in inflation since October has been largely attributed to the food sector, whose contribution shifted from a strong positive to negative from October 2024 through September 2025.
The SBI report anticipates an average CPI inflation rate for FY26 to be around 2.2%, which is notably lower than the 2.6% forecast by the RBI.
Price trends reveal that vegetable prices remain in the negative territory, alongside a continued decline in pulse prices and a drop in spice prices in September 2025.
Furthermore, fruit inflation decreased by 9.93%, and oil and fat CPI fell by 18.34%. Conversely, CPI for personal care saw an increase due to rising gold prices, while housing CPI experienced a slight uptick in September 2025.
The consistent decline in food inflation for 11 consecutive months up to September 2025, a first in the current CPI series, is marked by both significant magnitude and duration, characterized by two distinct phases.
'The uptick in Kharif sowing, predominantly in rice, maize, urad, and sugarcane, is expected to maintain lower prices for these commodities in the upcoming months, although potential disruptions may arise from excess rainfall post-monsoon,' the report noted.
As for the inflation trend across regions, both urban and rural areas have been witnessing a sustained decline since October, according to the report.
Point of View
I stand by the necessity for the RBI to adapt swiftly in response to changing inflation dynamics. The insights from SBI serve as a crucial guide for policymakers, ensuring that our national economic strategies align with observed trends. We must prioritize stability and growth in these uncertain times.
NationPress
14/10/2025
Frequently Asked Questions
What is the projected inflation rate for next month?
SBI projects India's inflation rate to be around 0.45% next month.
Why is the RBI's response to inflation important?
The RBI's actions are crucial as they directly impact monetary policy and economic stability.
What is the current CPI inflation rate?
India's CPI inflation reached a 99-month low of 1.54% in September.
What factors are influencing the decline in inflation?
The decline is primarily driven by reductions in food and beverage prices.
How does the inflation forecast for FY26 compare to RBI's prediction?
SBI forecasts an average CPI inflation of 2.2%, lower than the RBI's 2.6% estimate.
