The Reserve Bank of India (RBI) on December 5 revised CPI inflation projection to 2 percent from 2.6 percent projected earlier, Governor Sanjay Malhotra said while announcing the monetary policy.
RBI projected Q3 FY26 inflation at 0.6 percent as compared to 1.8 percent earlier, and Q4 at 2.9 percent as compared to 4.0 percent earlier. The inflation estimate for Q1 of the next fiscal is seen at 3.9 percent as compared to 4.5 percent projected earlier, and Q2 for the next fiscal is seen at 4 percent.
Here's what RBI Governor said:
RBI Governor Sanjay Malhotra said core inflation, which has been rising steadily, has eased at Q2 and is expected to remain anchored during the period ahead. Underlining inflation pressures are even lower because of easing precious metal prices, he added.
GST rationalisation supported festive demand this year, adding that speedy conclusion of international trades should provide upside potential to growth.
The RBI Governor said that inflation is likely to be softer than what was projected in October. "Core inflation (CPI headline excluding food and fuel) remained largely contained in September-October, despite continued price pressures exerted by precious metals. Excluding gold, core inflation moderated to 2.6 per cent in October. Overall, the decline in inflation has become more generalised," he added.
"Turning to the inflation outlook, food supply prospects remain bright on the back of higher kharif production, healthy rabi sowing, adequate reservoir levels and conducive soil moisture. Barring some metals, international commodity prices are likely to moderate going forward. Overall, inflation is likely to be softer than what was projected in October, mainly on account of the fall in food prices," the RBI Governor said.
Easing inflation
India’s retail inflation eased sharply to 0.25 percent in October, its lowest level in the current series that began in 2013, down from 1.44 percent in September. Malhotra said that this faster than anticipated decline in inflation was led by correction in food prices, contrary to the usual trend witnessed during the months of September-October.
The moderation was led by a continued decline in food prices, with the food index falling to -5.02 percent in October from -2.3 percent in the previous month, reflecting a broad-based softening in key staples and edible items.
On November 13, Moneycontrol reported that moderation in India’s retail inflation to a record low in October has provided the RBI with greater space for the rate cut if the growth remains weak in the second of the current financial year.
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