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Informist, Friday, Dec. 5, 2025

 

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--RBI Malhotra: Headroom from CPI outlook given space to support econ 
--RBI projects Jul-Sept FY27 CPI inflation at 4.0% 
--RBI revises Jan-Mar CPI inflation forecast to 2.9% from 4.0?rlier 
--RBI Malhotra: Rise in precious metal prices adding 50 bps to headline CPI 
--RBI revises Apr-Jun FY27 CPI inflation forecast to 3.9% from 4.5% 
--RBI revises Oct-Dec CPI inflation forecast to 0.6% from 1.8?rlier 
--RBI revises FY26 CPI inflation forecast to 2.0% from 2.6?rlier 
--RBI Malhotra: Core CPI largely contained in Sept-Oct 
--RBI Malhotra: Faster than anticipated decline in CPI on food prices fall 
--RBI Malhotra:Low headline, core CPI gave MPC room to provide growth support 
--RBI Malhotra: CPI likely to be softer than earlier projection 
--RBI Malhotra: CPI breached lower bound of flexible inflation aim in Q2 
--RBI Malhotra: Risks to inflation forecasts are evenly balanced 
--RBI Malhotra: Inflation going to be softer than projected in Oct  
--RBI Malhotra: Decline in inflation has become more generalised 
--RBI Malhotra: Growth-inflation balance continues to provide policy space 
--RBI Malhotra:Underlying inflation pressures even lower than headline shows 
--RBI Malhotra: Core inflation seen remaining anchored in period ahead 
--RBI Malhotra: Cut FY26, Q1 FY27 inflation projections 
--RBI Malhotra: Current growth inflation dynamics show rare goldilocks period 

 

 

 

 

NEW DELHI – The Reserve Bank of India Friday cut its headline inflation forecast for the current quarter ending December by 120 basis points to 0.6% and lowered the projection for 2025-26 (Apr-Mar) by 60 bps to 2.0%. Governor Sanjay Malhotra said that underlying inflation pressures are even lower than projected, buoyed by a sharp fall in food prices and limited impact of a rise in prices of some precious metals.

 

"Food supply prospects have improved on the back of higher kharif production, healthy rabi sowing, adequate reservoir levels, and conducive soil moisture," Malhotra said in his sixth monetary policy statement on Friday. "Barring some metals, international commodity prices are likely to moderate going forward," the governor added. "Overall, inflation is likely to be softer than what was projected in October."

 

The Monetary Policy Committee noted that the average CPI inflation this year was significantly below the target with growth in the first half of FY26 at a resilient 8%, placing the economy in a rare "Goldilocks" period. Drawing comfort from the record low inflation and possibility of exogenous pressures on growth, the rate-setting panel lowered the policy repo rate by 25 bps to 5.25%, while keeping the policy stance unchanged at 'neutral'. With this, the Monetary Policy Committee has lowered the headline repo rate by 125 bps so far in 2025. 

"The headroom provided by the inflation outlook has allowed us to remain growth supportive," Malhotra said. 

 

Latest available data shows retail inflation fell to a record low in October, thanks to a favourable base effect, continued fall in food prices, and lower goods and services tax rates. The headline print could have been even lower in October if not for the record high prices of gold and silver.

 

Data released on Nov. 12 showed CPI inflation fell to 0.25% in October from 1.44% in September. At 0.25%, the CPI inflation print is the lowest in the current series, which has data since 2014. Food inflation fell to (-)5.02% in October, the lowest in the current CPI series. Even sequentially, retail prices rose at a much lower pace of 0.2% in October than the average increase of 0.8% during the month in the last 12 years.

 

The quarterly break-up of the central bank's latest inflation forecasts is as follows – 0.6% for Oct-Dec, and 2.9% for Jan-Mar. It had previously forecast inflation in the third quarter to average at 1.8%, and fourth quarter at 4.0%. Malhotra also revised the inflation projection for Apr-Jun FY27 to 3.9% from 4.5%. For Jul-Sept FY27, the central bank projected inflation to average 4%. "The risks are evenly balanced." 

 

Core inflation--which excludes food and fuel items, whose prices can be volatile--is expected to remain anchored in the period ahead, the governor said. "Both headline and core inflation are expected to be at or below the 4% target during the first half of 2026-27,"  he said.

 

Gold and silver prices pushed up core inflation to 4.4% in October, the joint-highest in over two years, from 4.3% in September. The governor, however, said that underlying inflation pressures were even lower as the impact of an increase in price of precious metals was about 50 bps. "Excluding gold, core inflation moderated to 2.6% in October," he said. "Overall, the decline in inflation has become more generalised," the governor noted.

 

It is safe to say that the central bank has broadly made it through 2025 without significant inflationary pressures. According to Malhotra, the central bank and the Monetary Policy Committee will continue to meet the productive requirements of the economy in a proactive manner while ensuring macroeconomic stability.  End

 

Reported by Priyasmita Dutta

Edited by Avishek Dutta

 

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