The projections given by the Reserve Bank of India (RBI) on Consumer Price Index (CPI) inflation suggest that the inflation will remain lower than the medium-term target of 4 percent for a longer period.
In June monetary policy, CPI projections for FY26 were revised down by 30 basis points (Bps), Q1FY26 projections were revised down by 70 bps, Q2FY26 revised down by 50 bps.
The RBI has reduced its CPI inflation projection to 3.7 percent from its earlier projection of 4 percent for FY26."
“The outlook for inflation points towards benign prices across major constituents,” RBI Governor Sanjay Malhotra said.
Notably, India’s annual retail inflation had eased to 3.16 percent in April from 3.34 percent in March. This marked the lowest level in nearly six years as food prices rose at a slower pace, government data showed.
Malhotra said that food inflation is expected to remain benign, with easing of international commodity prices in line with the anticipated global growth slow down. He also said that inflation outlook is benign.
"Inflation has softened significantly in last six months and remain well below the target. Near term outlook gives us confidence of durable alignment with target, and also undershoot the target," he said.
Inflation has softened significantly over the last six months from above the tolerance band in October 2024 to well below the target with signs of a broad-based moderation, RBI said.
Along with this, the central bank has also delivered a higher-than-expected rate cut of 50 bps to support growth. Also, it slashed Cash Reserve ratio by 100 bps.
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