The central bank has projected the CPI inflation for the financial year 2025-26 at 4 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.
Retail inflation eased to a nearly six-year low of 3.16 per cent in April, mainly due to subdued prices of vegetables, fruits, pulses, and other protein-rich items, creating enough room for the Reserve Bank to go for another round of rate cuts in the June monetary policy review.
The Consumer Price Index (CPI) based inflation was 3.34 per cent in March and 4.83 per cent in April 2024.
It was 3.15 per cent in July 2019.
“This is an 18 basis points decline in headline inflation of April, 2025 in comparison to March, 2025. However, it is the lowest year-on-year inflation after July, 2019”, said Mr. Hemant Jain, President, PHDCCI,
The Reserve Bank, which has been mandated to ensure inflation remains at 4 per cent with a margin of 2 per cent on either side, has slashed the key interest rate by 50 basis points in two tranches (February and April) as the price situation improved.
The central bank has projected the CPI inflation for the financial year 2025-26 at 4 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.
“The significant softening of CPI and food inflation during April 2025 is mainly attributed to a decline in prices of Vegetables, Pulses & Products, Fruits, Meat & fish, Personal care and Cereals. Both the rural and urban segments of the economy are witnessing softening of CPI inflation, with 2.92 per cent and 3.36 per cent in April 2025 in comparison to 5.43 per cent and 4.11 per cent respectively in April, 2024,” he added.
What Does It Mean?
This is expected to further give comfort to the RBI to reduce interest rates in the next bi-monthly MPC meeting, which will reduce the industry debt burden.
“Going ahead, we expect food inflation to cool down further, given the anticipation of a good monsoon. Further, the crude prices is expected to be range bound between US$60 to US$65 per barrel in the short to medium term further boosting private final consumption expenditure and therefore bolstering economic growth, Jain concluded.
