The Reserve Bank of India (RBI) has reported a significant decline in consumer price index (CPI) inflation, which moderated to 3.2% year-on-year in April 2025—the lowest in nearly six years. This marks the sixth consecutive month of declining food inflation, while core inflation remained steady during March and April.
Favorable Agricultural Outlook
The RBI attributes this decline to several factors, including record wheat production, higher yields of key pulses during the Rabi season, and an anticipated above-normal southwest monsoon. These developments are expected to ensure adequate supply of essential food items, contributing to the moderation of inflation expectations, particularly among rural households.
Additionally, projections indicate a continued decrease in the prices of major commodities, including crude oil. However, the RBI cautions that weather-related uncertainties and evolving tariff concerns could impact global commodity prices, necessitating vigilant monitoring.
Inflation Projections
Taking these factors into account, the RBI projects CPI inflation for the financial year 2025-26 at 3.7%, with quarterly estimates as follows:
Q1: 2.9%
Q2: 3.4%
Q3: 3.9%
Q4: 4.4%
The RBI emphasizes that while the outlook is favorable, it remains essential to stay alert to potential risks that could affect inflation trajectories.