RBI's Inflation Forecast: A Balanced Outlook Amid Global Uncertainties

The Reserve Bank of India has projected retail inflation at 4.2% for the next fiscal year while maintaining a 4.8% forecast for 2024-25. Governor Sanjay Malhotra anticipates food inflation to soften due to good crop production. However, global market uncertainty poses a risk to inflation trends.

The Reserve Bank of India (RBI) announced its projection for retail inflation at 4.2% for the upcoming financial year starting April, while keeping the estimate at 4.8% for 2024-25. Unveiling the final bi-monthly monetary policy for the fiscal year, RBI Governor Sanjay Malhotra expressed optimism that food inflation will ease significantly due to robust crop production.

Governor Malhotra mentioned that core inflation is likely to rise but stay moderate. Despite this, global financial market volatility, unpredictable energy prices, and adverse weather remain potential threats to the inflation trajectory. The CPI inflation for 2024-25 is expected to be 4.8%, with the fourth quarter at 4.4%.

Assuming normal monsoon conditions, CPI inflation for 2025-26 is projected at 4.2%, with quarterly estimations showing slight variations. Previous reviews showed headline inflation peaking at 6.2% in October 2024. The Economic Survey recommends developing climate-resilient crops to ensure food price stability.

(With inputs from agencies.)