Crisil Projects CPI Inflation at 4% Amid Volatile Global Conditions

Crisil projects that CPI-based inflation will average 4% this financial year amid favorable monsoon forecasts and subdued non-food inflation due to lower commodity prices. With GDP growth predicted at 6.5%, factors like monsoon adequacy and repo rate cuts may support the economy despite global volatility affecting capital flows.

CPI-based inflation is anticipated to average around 4% this year, as per the latest Crisil report, marking a decrease from last year's 4.6%. Favorable monsoon forecasts and lower commodity prices are expected to keep food and non-food inflation in check.

The Reserve Bank of India's Monetary Policy Committee (MPC) uses the CPI as a primary mechanism for inflation targeting. Crisil forecasts GDP growth at 6.5%, cautioning against risks from US tariff policies that may affect exports while highlighting domestic growth drivers like a favorable monsoon and reduced repo rates.

While liquidity remains supportive, capital flow volatility is expected due to global uncertainties. The MPC's recent 50 basis point cut has adjusted the repo rate to 5.5%. Global unrest affecting crude oil prices is significantly impacting bond yields, equity markets, and currency dynamics.