The Reserve Bank of India (RBI) on Friday predicted the retail inflation in the next financial year (2025-26) amidst the expectation of softening of food items. At the same time, in the current financial year, its 4.8 percent estimate was upheld. RBI Governor Sanjay Malhotra, while giving information about the last bilateral monetary policy review of the current financial year, said that there is no possibility of any shock on the supply marche.
With this, there should be a significant decrease in food inflation in view of better production of kharif crops, softening of vegetables in winter and favorable possibilities regarding rabi crops. He said that main (core) inflation is estimated to increase, but it will remain at a moderate level.
Malhotra said that on the other hand there is a risk of inflation going over inflation given the uncertainty in the global financial markets with volatility in the price of energy and adverse weather events on the other hand. He said that keeping all these things in mind, the consumer price index (CPI) based inflation in 2024-25 is estimated to be 4.8 percent in the current financial year and 4.4 percent in the fourth quarter.
After chaired by Malhotra presiding over its first meeting of the Monetary Policy Committee (MPC), “CPI inflation is estimated to be 4.2 percent in 2025-26 with an estimate of normal monsoon being normal next year.” Its 4.5 percent in the first quarter, 4.0 percent in the second quarter, 3.8 percent in the third quarter and 4.2 percent in the fourth quarter.
The RBI, in its previous monetary policy review, had estimated the gross inflation for 2024-25 to be 4.8 percent and 5.7 percent in the third quarter. It was expected to be at 4.5 percent in the fourth quarter. CPI inflation was estimated to be 4.6 percent for the first quarter of FY 2025-26 and four percent in the second quarter.
It is noteworthy that retail inflation has come down to 5.22 percent in December in December. The main reason for this is the softening of the prices of food items including vegetables. It was at 5.48 percent in November. It was an average of 3.6 percent during July-August. Thereafter, 5.5 percent in September and 6.2 percent in October 2024. The contribution of vegetables and pulses to 32.3 percent of the total inflation in the current financial year was 32.3 percent.
