NewKerala.com

Key Points

India's inflation is showing remarkable signs of moderation, with the SBI predicting a significant drop in CPI rates. Dr. Soumya Kanti Ghosh suggests the RBI should consider rate cuts given the clear economic indicators. The food group has been a major driver of this inflation decline, with consecutive months of negative trends. These developments signal potential positive shifts in India's economic landscape.

Key Points: SBI Forecasts 0.45% Inflation RBI Rate Cut Signals

  • SBI expects FY26 CPI inflation at 2.2% versus RBI's 2.6% forecast
  • Food inflation shows consistent 11-month decline
  • Vegetable and pulse prices continue downward trend
  • Kharif crop sowing indicates potential price stabilization
3 min read

Inflation likely around 0.45 pc next month, time for decisive RBI actions: SBI

SBI economic advisor Dr. Ghosh predicts low inflation, urges RBI to consider rate cuts amid economic shifts

"It would be better to err on rate cut front - Dr. Soumya Kanti Ghosh, SBI Group Chief Economic Advisor"

New Delhi, Oct 14

India's inflationary print is likely to come around 0.45 per cent next month and that makes a strong case for decisive actions, according to a new State Bank of India (SBI) report, which stated that being the collective voice of myriad sections of markets and people at large, “we believe the RBI MPC too would listen to the tunes that are changing in these interesting times”.

For the record, FY27 inflation print are decisively lower at 3.7 per cent for now, said Dr Soumya Kanti Ghosh, Group Chief Economic Advisor, SBI.

"RBI, with its primary mandate of inflation targeting, runs the risk of missing the bull's eye if it remains fixated on market cacophony even when the deceleration in inflation has been way too evident and long term actuals, in general, seem quite detached from the figures released by the Central Bank in its own forecasters' assessment," Ghosh argued.

"It would be better to err on rate cut front (Type I error) than to err on the side of caution, languishing far behind the curve as markets seem to be quite uncertain about reading the Mint street's mind," Ghosh added.

India's CPI inflation moderated to 99-month low of 1.54 per cent in September due to decline in food and beverages inflation.

Interestingly, the decline in inflation since October has been driven by the food group, as its contribution declined from a large positive to negative between October 2024 and September 2025.

"We expect average CPI inflation for FY26 to be now at 2.2 per cent, much lower than 2.6 per cent RBI forecast," said the SBI report.

Item wise, vegetable prices continued to stay in negative zone while the deceleration in pulse prices continued and spices too exhibited decline in September 2025.

Additionally, fruits inflation declined (9.93 per cent) and oil and fat CPI too declined (18.34 per cent). On the other side, CPI inflation increased in case of personal care and effects owing to higher gold prices while housing CPI too witnessed a modest pick up in September 2025.

Further, the decline in food inflation for 11 consecutive months up to September 2025, a first in the current CPI series, was the largest both in terms of magnitude and duration and marked by two distinct phases.

"The increase in Kharif sowing mainly witnessed in rice, maize, urad and sugarcane should keep the prices of these products low in coming months though some disruptions may come through excess rainfalls seen in post monsoon period. Turning to inflation trajectory across regions, both urban and rural areas have been experiencing a sustained easing since October," according to the report.

- IANS

Share this article:

Reader Comments

R
Rohit P
Dr. Ghosh makes a valid point. RBI has been too cautious for too long. When inflation is at 99-month low and food prices are consistently down, what are they waiting for? Rate cuts will boost business sentiment and consumer spending.
A
Arjun K
While the numbers look positive, I'm concerned about gold prices pushing up personal care costs. Also, monsoon uncertainties could reverse the food price trend. RBI should balance optimism with practical caution.
S
Sarah B
As someone working in the banking sector, I appreciate SBI's data-driven approach. The 11 consecutive months of declining food inflation is remarkable. RBI should definitely consider rate cuts to support economic growth.
V
Vikram M
Lower pulses and spices prices are a huge relief for middle-class families like mine. But I hope the government ensures farmers get fair prices too. It's a delicate balance between consumer benefit and farmer welfare.
M
Michael C
The SBI report seems comprehensive, but I wonder if they're being overly optimistic. Global economic uncertainties and potential monsoon disruptions could quickly change this positive scenario. RBI's caution might be justified.

We welcome thoughtful discussions from our readers. Please keep comments respectful and on-topic.

Leave a Comment

Minimum 50 characters 0/50