New Delhi, 15 September (IANS). Retail inflation will see a decrease in the time to come, which can provide enough space to the Reserve Bank of India (RBI) to cut the repo rate by up to 50 basis points. This information was given in the report of Morgan Stanley released on Monday.
The report said, “The trend of headline inflation is likely to remain soft due to low prices of food products, reduction in GST rates and deficiency of input price pressures. The trend of headline inflation is likely to remain soft. We estimate that the headline inflation rate in FY 26 will be an average of 2.4 percent annually, so that the RBI will make 25 basis marks (0.25 percent) deduction in October and December.”
According to the report, the retail inflation rate for the last seven months has been running below the RBI’s 4 percent target, one of which is also a decline in food prices. However, the main inflation rate remains within a radius of 4.2 percent, while for the last 22 months, the main inflation rate has remained at 3.1 percent and below 4 percent, which is a sign of softening in inflation.
The report further states that this trend of low inflation rates is inspired by a combination of several factors, including consistent softening of food prices and favorable approaches inspired by better crop production. Randnessing GST is expected to lead to a decline in overall price levels.
The report said that the headline inflation rate can be 2.6 percent in the second half of FY 2025-26 on an annual basis, while it can be 2.4 percent throughout the financial year.
Due to GST reforms, the second half of the current financial year can lead to an increase in domestic demand. However, the demand from foreigner can be affected due to tariffs.
-IANS
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