New Delhi [India], November 12 (ANI): India’s retail inflation is expected to remain below the Reserve Bank of India’s (RBI) target of 2.6 per cent in the current fiscal year 2025-26, according to a report by Bank of Baroda released on Wednesday.
Dipanwita Mazumdar, Economist at Bank of Baroda, said the Consumer Price Index (CPI) inflation is forecasted at 2.4-2.5 per cent for FY26, with risks skewed to the downside. She cautioned that unseasonal rains in major Tomato, Onion, and Potato (TOP) producing states could impact prices, although current arrival statistics have not yet reflected any stress.
CPI inflation stood at 0.3 per cent in October 2025, a sharp decline from 6.2 per cent in October 2024 on a year-on-year basis. Headline inflation has remained below 4 per cent for nine consecutive months, which Mazumdar noted as “comforting from the monetary policy standpoint.”
The report highlighted that the outlook for food inflation remains favourable, supported by adequate supply. However, some correction in the deflation trajectory could occur if unseasonal rains affect TOP-producing states like Maharashtra and Gujarat. CPI excluding vegetables is also at its lowest level since September 2019.
The Bank of Baroda report suggested that while the RBI has room for monetary easing, any policy action would depend on the evolution of inflation in Q4 and the extent of transmission by banks.
The decline in October’s headline and food inflation was largely attributed to the full-month impact of GST rate cuts, a favourable base effect, and easing prices of oils and fats, vegetables, fruits, eggs, footwear, cereals, transport, and communication, according to the Ministry of Statistics and Programme Implementation (MoSPI).
Despite global inflationary pressures, India has successfully maintained a favourable inflation trajectory. The RBI had held its benchmark repo rate at 6.5 per cent for 11 consecutive times before implementing its first cut in nearly five years in February 2025. (ANI)
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