RBI MPC 2025: Panel Expects Food Prices To Reduce, Check CPI Inflation Estimate For FY26 Here

Sharing the projections about inflation levels in the economy, Governor Sanjay Malhotra said that the retail inflation rate for the 2024-25 fiscal year (FY25) is now estimated to be at 4.8 per cent.

Assuming a normal monsoon, the governor said that the consumer price index (CPI) inflation for the incoming 2025-26 fiscal year (FY26) is estimated to ease down to 4.2 per cent.

Source : ABPLIVE AI

The Reserve Bank of India (RBI)’s Monetary Policy Committee (MPC) decided to slash the key rates by 25 basis points and reduced the repo rate from 6.5 per cent to 6.25 per cent.

Sharing the projections about inflation levels in the economy, Governor Sanjay Malhotra said that the retail inflation rate for the 2024-25 fiscal year (FY25) is now estimated to be at 4.8 per cent. The projection for the last quarter in FY25 stands at 4.4 per cent.

Malhotra explained that headline inflation softened sequentially in Novemeber-December 2024, against the peak of 6.2 per cent seen in October. "The moderation in food inflation, as vegetable price inflation came off from its October high, drove the decline in headline inflation. Core inflation remained subdued across goods and services components and the fuel group continued to be in deflation," the official said.

CPI Inflation Projections For FY26

Looking forward, assuming a normal monsoon, the governor said that the consumer price index (CPI) inflation for the incoming 2025-26 fiscal year (FY26) is estimated to ease down to 4.2 per cent. "Going ahead, food inflationary pressures, absent any supply side shock, should see a significant softening due to good kharif production, winter-easing in vegetable prices and favourable rabi crop prospects. Core inflation is expected to rise but remain moderate," the RBI governor said. 

Malhotra noted that the major risks to inflation remained the uncertainty in global financial markets, along with volatility in energy prices and unpredictable weather events. Considering these factors, the governor projected the CPI inflation to touch 4.5 per cent in Q1, 4 per cent in Q2, 3.8 per cent in Q3, and 4.2 per cent in Q4 in the upcoming FY26. The official noted that the risks remained evenly balanced.

Meanwhile, the panel unanimously decided to slash key rates by 25 bps. This means that the standing deposit facility (SDF) rate now stands at 6 per cent, while the marginal standing facility (MSF) rate and the bank rate is at 6.50 per cent now.