Mumbai (Maharashtra) [India], April 23 : The outlook for food inflation in India has turned decisively positive over the recent correction in vegetable prices, coupled with estimates of a record wheat and higher pulses production, the Minutes of the latest RBI monetary policy said.
There has been a substantial and broad-based seasonal correction in vegetable prices.
The uncertainties regarding Rabi crops have abated considerably, and the second advance estimates indicate a record wheat production and higher yields of key pulses compared to last year.
"Along with robust kharif arrivals, this is expected to set the stage for a durable softening in food inflation. Sharp decline in inflation expectations for three months and one year ahead period would help anchor inflation expectations going ahead," the RBI minutes read.
Furthermore, the fall in crude oil prices augurs well for the inflation outlook.
"Concerns on lingering global market uncertainties and recurrence of adverse weather-related supply disruptions pose upside risks to the inflation trajectory," the minutes read.
Taking all these factors into consideration, and assuming a normal monsoon, Consumer Price Index (CPI) inflation for the financial year 2025-26 is projected at 4.0 per cent, with Q1 at 3.6 per cent; Q2 at 3.9 per cent; Q3 at 3.8 per cent; and Q4 at 4.4 per cent, with risks evenly balanced.
Asserting that the global economic outlook is fast changing, the RBI minutes noted that the recent trade tariff related measures have exacerbated uncertainties clouding the economic outlook across regions, posing new headwinds for global growth and inflation.
"Financial markets have responded through sharp fall in dollar index and equity sell-offs with significant softening in bond yields and crude oil prices," it added.
The Reserve Bank of India also recently lowered the growth forecast for the current fiscal 2025-26 to 6.5 per cent from 6.7 per cent, amid uncertainties arising from trade wars following the reciprocal tariffs announced by the US.
The National Statistics Office (NSO) has estimated real Gross Domestic Product (GDP) growth at 6.5 per cent for 2024-25, on top of 9.2 per cent in 2023-24.
The Monetary Policy Committee (MPC) held its latest meeting from April 7 to 9, 2025, under the chairmanship of RBI Governor Sanjay Malhotra.
The MPC unanimously voted to reduce the policy repo rate by 25 basis points to 6.00 per cent, effective immediately.
The decision aligns to achieve the medium-term target for consumer price index (CPI) inflation of 4 per cent within a band of (+/-) 2 per cent, while supporting growth. Inflation has been a concern for many countries, including advanced economies; however, India has largely managed to steer its inflation trajectory in a relatively stable direction.
The RBI typically conducts six bimonthly meetings per financial year, during which it deliberates on interest rates, money supply, inflation outlook, and various macroeconomic indicators. The other five meetings are scheduled for June 4-6, August 5-7, September 29- October 1, December 3-5, and February 4-6.
The RBI Monetary Policy Committee (MPC) consists of six members three from the RBI, including the Governor, and three external members appointed by the Central Government.
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