India’s CPI inflation likely at 4.3 percent

New Delhi

India’s retail inflation, measured by the Consumer Price Index (CPI), is expected to average 4.3 percent in the current financial year (FY26), says a new report by Crisil. It estimates food inflation at 4.6 percent, fuel inflation at 2.5 percent, and core inflation at 4.2 percent.

The report highlights that food inflation is likely to stay under control due to healthy rabi crop sowing, low global food prices, and a forecast of an above-normal monsoon by the Indian Meteorological Department. A high base from last year will also help lower inflation figures this year.

Non-food inflation is expected to remain stable due to weak global commodity prices. However, Crisil warns that sudden heatwaves or weather changes could still affect prices.

Given the expected low inflation and risks to economic growth, the Reserve Bank of India (RBI) may cut interest rates twice this year, by 25 basis points each. This could reduce the 10-year government bond yield to 6.4 percent by March 2026, down from 6.7 percent in March 2025.

In fiscal 2025, headline inflation fell to 4.6 percent from 5.4 percent in 2024. This drop came mainly from record-low core inflation at 3.5 percent. Food inflation, although high at 7.3 percent, eased slightly from 7.5 percent the previous year.

The March 2025 inflation print was 3.3 percent, offering some relief to policymakers. Food inflation dropped to 2.7 percent from February’s 3.7 percent, driven by falling vegetable and pulse prices during a cooler winter season.