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Key Points

The Reserve Bank of India has significantly lowered its inflation projection for the current financial year. Governor Sanjay Malhotra attributed this positive development to falling food prices and GST rate adjustments. The Monetary Policy Committee unanimously decided to maintain the repo rate at 5.5 percent. India's economic strength continues with good monsoon conditions supporting growth momentum.

Key Points: RBI Cuts FY26 CPI Inflation Forecast to 2.6 Percent

  • RBI revises FY26 inflation forecast down to 2.6% from previous 3.1% projection
  • Sharp decline in food prices and GST rationalization drive inflation moderation
  • Monetary Policy Committee keeps repo rate unchanged at 5.5 percent
  • Indian economy shows strength with good monsoon supporting higher Q1 growth
3 min read

RBI revised CPI inflation downwards to 2.6% for FY26 from earlier projection of 3.1%

RBI Governor Sanjay Malhotra announces downward revision of CPI inflation to 2.6% for FY26, citing falling food prices and GST rationalization as key drivers.

"The average headline inflation for this year has been consequently revised lower from 3.7 per cent which was projected in June, 3.1 per cent in August, to now 2.6 per cent - RBI Governor Sanjay Malhotra"

Mumbai, October 1

The Reserve Bank of India (RBI) on Wednesday revised its inflation target for the current financial year to 2.6 per cent, marking a significant moderation from earlier projections.

In August policy as well, the inflation target was revised downwards to 3.1 per cent, down from 3.7 per cent projected in June.

Announcing the decision, RBI Governor Sanjay Malhotra stated that the Monetary Policy Committee (MPC) observed that the overall inflation outlook has turned even more benign over the last few months.

He stated, "The average headline inflation for this year has been consequently revised lower from 3.7 per cent which was projected in June, 3.1 per cent in August, to now 2.6 per cent".

As per the RBI Governor, this improvement has been largely driven by a sharp decline in food prices and the rationalization of Goods and Services Tax (GST) rates.

As a result, average headline inflation for the year has been revised downward to 2.6 per cent.

Governor also shared that the headline inflation for the fourth quarter of this year and the first quarter of next year has also been revised downwards.

Highlighting the broader economic context, Governor Malhotra said the Indian economy continues to exhibit strength, buoyed by a good monsoon.

He stated, "Buoyed by a good monsoon, the Indian economy continues to exhibit strength by registering a higher growth in Q1. At the same time, there has been a considerable moderation in headline inflation".

On the global front, the Governor noted that major economies such as the United States and China have shown more resilience than anticipated, registering robust growth. However, the global outlook remains clouded by elevated policy uncertainty.

He also pointed out that inflation has remained above respective targets in some advanced economies, posing fresh challenges for central banks worldwide as they navigate shifting growth-inflation dynamics.

The RBI's latest revisions reflect an optimistic assessment of India's economic growth and inflation trajectory.

In a unanimous decision, the Monetary Policy Committee (MPC) of the Reserve Bank of India (RBI) also kept the policy repo rate unchanged at 5.5 per cent in its policy announcement on Wednesday, RBI Governor Sanjay Malhotra said.

The governor informed that the MPC met on September 29 and 30, and October 1, to deliberate on the prevailing economic conditions and decide on the interest rate trajectory.

After a detailed assessment of the evolving macroeconomic outlook, the committee voted unanimously to maintain the repo rate at 5.5 per cent.

- ANI

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Reader Comments

R
Rohit P
Good to see RBI's positive outlook, but I'm not feeling this inflation reduction in my monthly budget. Vegetables and groceries still seem expensive in Delhi markets. Hope the actual ground reality matches these projections.
A
Arjun K
With inflation coming down to 2.6%, RBI should consider reducing interest rates now. This would boost consumption and help small businesses. The unchanged repo rate at 5.5% seems conservative given the improving inflation scenario.
S
Sarah B
As someone working in the financial sector, I appreciate RBI's cautious approach. Keeping rates steady while inflation trends down shows good monetary policy management. The good monsoon has really helped stabilize food prices across India.
V
Vikram M
Great to see India's economy performing better than many advanced nations. While US and China face inflation challenges, we're managing ours well. Jai Hind! 🇮🇳 The GST reforms are finally showing positive results for common citizens.
K
Kavya N
While the numbers look good, I hope RBI maintains this conservative stance. We've seen how quickly inflation can spike due to unexpected factors like weather conditions or global commodity prices. Better to be safe than sorry! 👍

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