Core inflation remained largely steady and contained during March-April, despite an increase in gold prices exerting upward pressure
Highlighting that inflation has softened significantly over the last six months from above the tolerance band in October 2024, the Reserve Bank of India has projected consumer price index (CPI) inflation to print at 3.7 per cent for this fiscal year (FY26), down from its earlier forecast of four per cent.
The Monetary Policy Committee (MPC) of RBI stated that the forecast for the first quarter is projected at 2.9 per cent, Q2 at 3.4 per cent, Q3 at 3.9 per cent and Q4 at 4.4 per cent. The MPC also added that the risks are evenly balanced.
“The outlook for inflation points towards benign prices across major constituents. The record wheat production and higher production of key pulses in the Rabi crop season should ensure adequate supply of key food items. Going forward, the likely above normal monsoon along with its early onset augurs well for Kharif crop prospects,” the statement added.
Core inflation remained largely steady and contained during March-April, despite an increase in gold prices exerting upward pressure. Fuel group witnessed a reversal of deflationary conditions and recorded positive inflation prints during March and April, partly reflecting the hike in liquefied petroleum gas (LPG) prices.
“Notwithstanding these favourable prognoses, we need to remain watchful of weather-related uncertainties and still evolving tariff-related concerns with their attendant impact on global commodity prices,” the official statement noted.
Led by the easing in inflation and after assessing the current and evolving macroeconomic situation, the MPC voted to reduce the policy repo rate by 50 basis points (bps) to 5.50 per cent with immediate effect.
