Has RBI Lowered Its Inflation Forecast to 3.7% for 2025-26?
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Synopsis
The RBI's recent reduction in its inflation forecast to 3.7% for 2025-26 brings optimism for economic stability. Governor Sanjay Malhotra highlights a declining trend in inflation, with expectations of adequate food supply due to favorable agricultural conditions.
Key Takeaways
- RBI's inflation forecast for 2025-26 is now 3.7%.
- Quarterly inflation estimates are 2.9%, 3.4%, 3.9%, and 4.4%.
- Inflation has declined significantly from October 2024.
- Food inflation is expected to remain benign.
- Core inflation is stable despite rising gold prices.
Mumbai, June 6 (NationPress) The Reserve Bank of India (RBI) has adjusted its inflation projection for the fiscal year 2025-26, lowering it from the previous estimate of 4 percent to 3.7 percent, as stated by RBI Governor Sanjay Malhotra on Friday.
Considering various factors and anticipating a normal monsoon, the Consumer Price Index (CPI) inflation for 2025-26 is now expected to be 3.7 percent, with quarterly estimates of 2.9 percent for Q1, 3.4 percent for Q2, 3.9 percent for Q3, and 4.4 percent for Q4.
Malhotra noted that inflation has notably decreased over the past six months, falling from above the tolerance threshold in October 2024 to well below the target, indicating a broad-based moderation. The outlook for the near and medium term provides confidence not only for a sustainable alignment of headline inflation with the 4 percent target but also suggests that it may undershoot this target during the year.
While the food inflation outlook is encouraging, core inflation is projected to remain mild, thanks to declining international commodity prices in line with the expected slowdown in global growth, Malhotra explained.
He highlighted that CPI headline inflation has continued to decline, reaching a nearly six-year low of 3.2 percent (year-on-year) in April 2025, primarily due to a fall in food inflation, which has seen a sixth consecutive monthly decline.
In contrast, the fuel sector has experienced a shift from deflationary trends to positive inflation, partly due to increased LPG prices. Core inflation has remained stable during March-April, despite upward pressure from rising gold prices, Malhotra added.
The inflation outlook suggests that prices will remain benign across major categories. Record wheat production and increased yields of essential pulses during the Rabi season are expected to maintain a robust supply of key food items. Moreover, a probable above-normal monsoon along with an early onset is favorable for Kharif crop prospects.
Reflecting these trends, inflation expectations are showing a decrease, particularly among rural households. Most forecasts indicate continued moderation in the prices of vital commodities, including crude oil, according to the RBI Governor.
However, Malhotra cautioned against complacency. “Despite these positive forecasts, we must remain vigilant about weather-related uncertainties and ongoing tariff issues that could impact global commodity prices,” he warned.
Point of View
It is essential to recognize the RBI's proactive measures in managing inflation expectations. The updated forecast aims to instill confidence in the economy, particularly in the face of global uncertainties. The Nation supports the RBI in its commitment to maintaining economic stability and ensuring favorable conditions for all citizens.
NationPress
22/07/2025
Frequently Asked Questions
What is the new inflation forecast for 2025-26?
The RBI has revised its inflation forecast for 2025-26 to 3.7%, down from the previous estimate of 4%.
Who announced the inflation forecast change?
The announcement was made by RBI Governor Sanjay Malhotra on June 6.
What factors influenced the revised inflation outlook?
The outlook was influenced by a broad-based moderation in inflation, expected normal monsoon conditions, and easing international commodity prices.
What is the projected inflation for each quarter of 2025-26?
The projected CPI inflation for 2025-26 is 2.9% for Q1, 3.4% for Q2, 3.9% for Q3, and 4.4% for Q4.
Are there any risks to the inflation forecast?
Yes, there are concerns regarding weather-related uncertainties and tariff issues that could impact global commodity prices.
