SBI projects that the average CPI inflation for FY26 will be between 3.0-3.2%

PTI New Delhi

India's retail inflation is expected to reach a record low in July 2025, with the average inflation for the financial year 2025-26 projected to be significantly lower than the Reserve Bank of India's (RBI) estimate, according to a report by the State Bank of India (SBI).

"We believe that the upcoming July 2025 CPI inflation data is set to breach the lowest ever historical print," the report said. SBI projects that the average CPI inflation for FY26 will be between 3.0-3.2 per cent, which is significantly lower than the RBI's estimate of 3.7 per cent and well below the average of 4.6 per cent recorded in FY25.

This sharp moderation in inflation comes on the back of a recent 50 basis points rate cut by the RBI in its June policy. The report noted that with benign inflation expectations in place, the central bank is now focusing on supporting capital formation to ensure more durable and sustained growth.

As noted by the Monetary Policy Committee (MPC) in its resolution, the panel remains data-dependent while deciding the future course of monetary policy. The aim is to strike a balance between growth and inflation, the report added. Looking ahead, SBI sees the current inflation trend as firmly benign, even as external trade-related disruptions and unpredictable price movements continue to pose risks.